Market Round Up
Published: Sat, 11/19/16
19 - NOVEMBER - 2016
Dear Members,
My Long standing view that the rally in Nifty this year was counter trend is proving to be true. Classic over positioning, Inter Market divergences etc preceded the top and were discussed in detail in the Long Short report and Updates. Analysts are now coming to terms with the reality of the impact recent events will have on earnings and growth. We have seen 6 quarters of no growth at a index earnings growth level and now that is likely to continue for a few more quarters. However the market
was priced for a 20% CAGR for the last two years. Investors who have overpaid for growth are in for a rude shock. Many long term patterns are developing on stocks and for that reason I called the Sept LSR ''The big picture'', and am posting more Long term charts of stocks and patterns now rather than only near term waves. This is of great significance to Long term investors. The corrective process at a Macroeconomic level is much needed to be able to start a more sustained Bull
market that is not a bubble and only inflated by rising prices and liquidity but productive growth that enhances the real living standards for all Indians. So far the great Indian boom has given everybody more money but not a better life. Its coming.
That said here are some of the posts from this week.I spent a lot of time on Global Bond Equity and Dollar relationships because the recent Bond Market Crash is a major Long term event and will not go unnoticed.
STAY AHEAD of the market turns.
Dollar IndexThe dollar is coming close to the trendline of the highs at 101. A sustained move above that would be a breakout and a failure a triple top. So this is going to be important. In a separate post I have shown how the bond prices indicated a trend for the dollar, so a decisive trend should develop from here. The chart below shows arrows on my bullish and bearish posture for the Dollar index. I started out being bullish at the May and June lows but have recently started to anticipate that this move up will not breakout into a major dollar rally. Now let me just leave it open that is my bias based on what I expect equities and commodities to do. We are close to the inflection point and should soon find out. With many commodities in a rally a breakout could put all of them in jeopardy and not just the Precious Metals.
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Dow and BondsIn the Last few days I have been writing again and again about the bond inversion and this is supported by extremes in Sentiment. Yesterday for the first time since 4th Nov the Dow closed negative and bonds closed positive. Both are at sentiment extremes. Dow measured by the Trin indicator, and bonds by the daily sentiment index, a survey of traders bu trade-futures.com shows only 4% bullish on the 30 year. Both trends are mature for a complete reversal in the coming days.
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EuroThe Euro is coming close to the lower trendline of the triangle at 1.0645, this is a major support especially important as it marks wave E of the triangle the last and final dip, and is now accompanied by a 7% reading on the Daily sentiment index. Very close to the 3% reading seen at the wave C low. I would expect based on this a complete reversal in the Euro soon to start a up trend that will be meaningful enough to test the upper line of the triangle at 1.152
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ADR indexEven as US markets marched higher the ADR index was lower for the month. The chart shows a 3 wave advance that is giving up. The rising channel has support at 119 below which we may consider that the up move is over and the next major down wave to new lows has started.
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USDCNYThis requires mention because it is not anywhere in the everyday Media that is all over trump and demonitisation. The USDCNY has been falling like fire for the entire last week. This coming right after its inclusion into the SDR basket could mean something. The trend is not over even as it is overbought on RSI. There could be a short term pause but the trend up will conitnue. It will continue till that is all the Media starts to talk about. The wave counts show that it is now going parabolic with no clear end point. Channels might not work
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KapasKapas - broke out of a triangle long term [wave 4], and is in wave 5. Of that wave 1 and 2 are now complete. Wave 2 retraced and held the 61.8% mark at the gap and so wave 3 up might have now started. Wave 3=1 goes to 1233 as the next potential target. Wave 2 support is at 863
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US 10 year T NotesUS 10 year treasury notes continued to fall despite oversold readings and that mostly happens only when the trend is strong. At a larger degree that is the case. Even though we maybe in wave 5 down any bounce might now be restricted at the blue trendline that we just broke. In other worlds the bond market sell off is just getting started. We are in wave C down that might not end at C=A which is slightly below the point of wave A. If it extends it could go to the next swing low near the low of wave D at 115 . So continue to expect lower tops and bottoms in Bonds. Any rally from oversold conditions maybe short lived.
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Rohit Srivastava
www.indiacharts.com
For accurate market forecasting. Market forecasting is a study of past data to assess future probable outcomes. It is our endeavor to discuss high probability outcomes for traders and investors. However this is not a solicitation to buy or sell stocks futures or options or any security. Trading in any financial market should be done with sound knowledge and the help of a qualified investment adviser. Stocks based on the Elliott wave model are based on the Fibonacci fractal of the market and momentum indicators, Levels are based on Fibonacci maths and are only indicative of what the mathematical model throws up. This is not a research report. We are not investment advisors This is not a recommendation to buy/sell.
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Value Wave Stocks discusses the short term trading set ups that we use while taking our trading decisions. Value wave Investments. discusses the long term set ups that we use while taking our investment decisions. We hold investments in these stocks and are interested in these opinions. This is not the only reason considered while taking our actions. Kindly take the help of a qualified investment advisor before trading. Rohit Srivastava is a Fund Manager of a trading PMS fund at Sharekhan Ltd.
that has active open long and short positions in the futures markets at any point of time. The opinions here are for your education and understanding only of how we identify stocks to trade/invest in. We change our opinion daily and even hourly. Any actions taken by you are at your own understanding and risk. We do not offer personalised advise or research of any kind.
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