Home > Uncategorized > MARKET NOTES: Critical tests lie ahead over the next two weeks in most markets

MARKET NOTES: Critical tests lie ahead over the next two weeks in most markets


MARKET NOTES:  Critical tests lie ahead over the next two weeks in most markets



NYSE Composite: The NYSE Composite index illustrates the state of play in the US markets better than any of the more narrower cousins that are the subject to much tinkering by authorities every now and then.  The picture it shows is considerably more bearish than the other indices.  Firstly, on a pullback from 6500 level, the index failed to top 8730, a point that was easily crossed by the narrower indices.  That means, as far as the broad mass of stocks in the US were concerned, the rally from 6500 starting in October 2011 was nothing more than a pullback rally.  Secondly, the NYSE Composite has now commenced wave III of the down move from April 2011 and the target for this down would at least be a retest 6500.



It is too early to estimate what shape the fall from 8360 will take.  The immediate target for the NYSE appears to be test of its 200 DMA currently placed at 7800.  It is quietly likely that the index may bounce for a while from its 200 DMA but the bounce is likely to be deceptive.  Continue to be bearish on the US equity markets.



Spot Gold:  Gold’s price action since the pullback to challenge its overhead resistance of 1800 on 28th February has been very bearish.  Note that the fall from 1800 to 1628 was followed by a feeble attempt to pullback. The metal is currently headed for a test of 1630.  The resistance is unlikely to hold and the metal could target 1550 after a breach of this resistance.  Indeed, the last pullback has been so feeble that one would have to brave to assert that 1550 will hold.  Very bad news ahead for gold bugs.



HG Copper:  Copper appears to be headed for a test of 3.6 and on a breach of that level to 3.0.  The next few trading sessions should help resolve the nature and depth of the ensuing correction for a lot of industrial stocks.  Needless to say a breach of 3.6 will be very bearish for the metal and industrial stocks.  Would be worth watching this critical metal over the next two weeks.



Silver:  31 is a crucial level for Silver.  A bounce from that region over the next two weeks will indicate if the metal is in a normal bullish correction.  A decisive breach on the other hand, will point to an impulse wave unfolding from the top of 49.4 making for a target of $20 for the metal within reach over time.  A short bounce from 31 will not negate this bearishness.  It will only change the nature of the correction unfolding and the ultimate target for the correction.



NYMEX Crude:  Crude oil continues to befuddle.  In passing one may note that crude has made a double top in the 110 to 115 region and is on its way down.  While this price action is indisputable, the long-term wave counts are conflicted.  Crude is likely to test $100 in the next few trading sessions before pulling back.  Don’t recommend trading in crude due to conflicted wave count.



$-Index:  The $ is currently placed at 79.3 and appears headed to test 78.75 in the next few trading sessions.  A breach of that level will lead to a test of 78.  Bearish action in the $ but a major move isn’t indicated on the charts unless 78 is breached.  Expect range bound movement for sometime more.



$-INR:  As expected, the $ topped 52 during the week and closed at 52.07.  The next overhead resistance for the $ is placed at 52.75 and may be taken out over the next two weeks after a bit of consolidation above 52.  Over the longer term, a retest of 54 is surely on the cards by end of May.



Euro-$:  Euro pullback from 1.30 is reactive and the crucial level is likely to be retested over the next few weeks.  Note the level has been tested three times already and may give way on the 4th.  However, on a breach of 1.3 the downside may be limited.  It is very unlikely that the floor of 1.26 will be tested in the ensuing move.



Sensex:  The Sensex has been testing the floor 17,000 repeatedly; having already done so three times and is now heading for the 4th attempt.  The Sensex’s 200 DMA is placed at 17,268 while its 25 DMA is placed at 17,344.  A confluence of the two moving averages combined with the critical floor at 17,000 make the next week or two of trading in the Sensex critical for the shape of the correction that will unfold.  In my view the 17,000 level is unlikely to hold.  A breach of the same will open the way for 15,500 and then 15,000.  Bearish on Indian markets even if 17,000 holds up for now.



Shanghai Composite:  ShComp turned up from the level of 2240.  This point is higher than the low of 2160 made in December 2011, a low that this blog correctly called.  On a rally from there, the index made a double top at 2478.  Correcting from that level, it made a low of 2240 [higher low] and is currently placed at 2407.  A retest of 2476 is almost certainly on the cards.


A break atop 2480 will confirm a bullish intermediate uptrend in the Chinese index and open the way for a test of 2550.  A breakout above 2550 is bullish Holy Grail for the index.  It is likely that the index may consolidate for a while below 2480 before attempting a break out.  The price action bears a close watch.





NB: These notes are just personal musings on the world market trends as a sort of reminder to me on what I thought of them at a particular point in time. They are not predictions and none should rely on them for any investment decisions.



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