A Wild week, Gold and Equities

Published: Sun, 01/10/16

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A wild week
Some major trends are starting and if you have been reading my view on Gold I believe that we have formed an ending diagonal, a pattern that occurs at the end of a trend. And the trend has been down. So the next move is going to be up and it could be big. An ending diagonal could mark not just the end of the bear market but the resumption of a bull market that started in 1999. So Gold cannot be ignored.

This week was interesting as the hype around the big trends of 2015 were all over the media. The rising dollar and falling commodities. But those were the trends of last year and they need not be trends for 2016.I believe the current panic is a capitulation that will reverse trends across many assets. The news says Yuan was the problem. The Yuan has been falling for weeks and months so that appears more a panic capitulation move that we are reacting to. Same for crude and commodity linked countries. Brazil and Russian stock markets have already crashed. This is not new news but old news. So this time the reasons are going to change.

Today I am sharing an interesting video on Gold with a lot of data worth pondering over. And other updates posted during the week on Indiacharts.

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  Nobody Cares
Video

Euro at support again

Euro Dollar fell further but it is now at 61.8% retracement of wave i and at the lower end of a falling channel and so there is no change in my view that the next move should be in wave iii up.

euro060116


S&P on the line AGAIN

The US indices made a leap lower again but I am closely watching if the S&P can make it below this falling channel. The lower end should be a good support if it holds for a third time. Note the daily sentiment index or DSI from trade futures.com reported a reading of only 6% surveyed as bullish. Readings between 4-7% occurred at all the price lows since Sept 2015. So I take this reading as an indication of oversold conditions at this moment.

snp070116


Where is crude headed?

Crude Oil is back in the news as the recent advance ended in the form of a triangle. This is therefore wave iv and wave v down is unfolding. v=i points to near 31.50, where as the bottom in 2008 was made at 32.40, so we will be in that price range in the next few days and should expect a bottom in the 32.40-31.50 range.

crude070116

 

ADR index

Yesterday the S&P fell below the line I was talking about but sentiment is also at an extreme negative. This does not give me comfort for the short trade. So I looked at the ADR index which also broke below its sept low. The fall has a series of overlapping legs and yes I was expecting this index to eventually start a 3rd wave lower, so has it?

Maybe, maybe not! There are two alternates, First that the recent bounce is wave 2 and 3 started. Then we only retrace the recent fall in the next bounce and then the decline resumes. However the weekly and monthly charts suggest that this recent expanding structure is wave 5 of the impulse down from the April high and a larger bounce might still be on the cards. The break of the Sept low is reason to be nervous, but both cases tell me to wait for a bounce first and then figure it out.

 adr080116

I will be in meetings today so further updates during the day will only come if time permits
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Rohit Srivastava
www.indiacharts.com
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