Beating the Street at Its own Game

Published: Mon, 11/29/21

Dear ,

It is easier said than done but it is an old saying

Buy when everyone is fearful - or when there is blood on the streets.

Then it comes down to your perception, what do you see or feel everyone is doing. Do you have a barometer for everyone or a data driven process or do your feelings dictate everything?

The last few days brought out the best of fear in everyone, thoughts of a return to the days of the first wave of Covid were back. That is what makes markets so interesting.

So let me share some of the EW charts from last week that are free to read. For everything else Sign up and get started

Rohit Srivastava

The Truth About the Markets

Today's Updates

US and Indian Markets Diverge

This chart dating back to Nov 2020 shows performance cycles between US and Indian markets that are alternating. Meaning when one goes up the other goes sideways or down and vice versa. This repeated pattern has therefore made it difficult to look at US markets and try to judge what India will do. I am happy about it. Look at your own charts and figure it out. So that is a true test of your analytical skill. The reason for this behavior may have to do with the relative strength of the US economy as reflected in the rising dollar recently. Longer-term both markets are going up so no problem there. Only if the long-term trend changes for sure will the two correlate on the way down but till then who cares. Even within the US indices there is rotation where the NDX goes up when the DJI goes down.

Soyabean NCDEX

Soya Bean has possibly started its next leg of up move and possibly circle wave 3 can now unfold. At 16860, wave 1 and 3 will be equal. However, in the short term, some pullback or retracement is possible at some point in time as it has rallied without any major correction/consolidation. On the way down, 40DEMA and the 20DMA which are currently pegged at 6070 and 5715 respectively, will provide support in case of any pullback/consolidation. Overall, in the short-term, some pullback cannot be ruled out, but in the medium to long term, possibly circle wave 3 has started.

indian 10 year gsec yields

Bond yields around the world are rising and it is rubbing off here as well. GSEC yields are creeping up and creeping is the right word as the move is slow. Now everyone is predicting a rate hike by RBI but Indian data still shows no inflation pressure. Nothing significant as yet. And by Q2 of 2022 it is expected to peter down. So it might not be a major risk. But technically we cannot rule out that a 5 wave decline is followed by a bounce back in yields back to the wave 4 of previous decline. That is near 6.85. So there is some upside for the GSEC 10 year yield. But longer term this is wave 2 of a 5 wave decline.

Bitcoin

BTC - only a small change in how we mark wave c as 5 waves down. Wave iv becomes a running triangle and now the low of 53482 is presumed to be the low for wave 2 for the expanded flat. Everything else remains the same.

Euro

I am going to remain relentless at this because that is where the big money is, in the big picture view. The decline in the Euro has not crashed the world to a larger degree. All we got is a correction in some markets and commodities. The key lies in getting the trend reversal and then latching back to the dollar trade. The chart below shows the sentiment extremes at the recent swing lows of the Euro, which ended with a positive divergence [11% on a lower low]. Now the big positive bar can be the first sign that the trend has changed but we should wait for Rohits momentum indicator to confirm.

S&P 500

The Indian market may appear to be in trouble but the US market is just ending wave II of 5 and it feels too early to call it a day. Wave 5 should extend till 5 waves are complete inside it before we can call an end to this move.

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Rohit Srivastava
www.indiacharts.com
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