Bullish on Inflation, Metals, Agro, Dollar CRB
Published: Fri, 11/25/16
25 - NOVEMBER - 2016
Dear Members,
As the expiration week comes to an end and all speculative Long Positions stand unwound has the market bottomed? If that is the question that needs to be answered read Nifty Daily. What is the big trend for various markets going ahead is what we cover in the Long Short Report. That I believed for six months that the entire market advance from the FEB low was counter trend has been proven true. But there is a log of talk still about a Bull Market. Not yet in My models. The real bull market is elsewhere like in the dollar or in commodities. On a relative basis Gold and USDINR have done better than the Nifty since 2008. In to put it lightly Inflation is beating the indices hands down. Yes thematic investments have paid off but not diversified investing. The Real bull Market has not yet started. Today I cover a lot on the Commodity segment that I have been writing about all week long. Enjoy!
STAY AHEAD of the market turns WITH INDIACHARTS INSIDERS.
Soy BeanSoy Bean - A year back I anticipated that the triangle was complete. The only change is that the triangle is still forming and probably very close to complete. The weekly chart below shows a final retest of the lower line a third time near 2827. We do not have to touch it. The RSI is already bouncing back from oversold territory. The next move higher would be a long term wave 5 advance that should go past the wave 4 high and upper line at 4520 and 5064
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JeeraJeera NCDEX - starting 2014 has two impulse waves up. Each has retraced 61.8%. Near 15700 61.8% would be done. The recent low was very close to it so it is possible that wave 3 of 3 up has started. 3=1 for the next move would then point to 24500. The 20/40 day averages are near 17150
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USDDKKUSDDKK - or the Danish Krone. Tracking multiple pairs sometimes gives you insights into the overall picture as well. In this case the USDDKK almost completely follows the Euro dollar. So this chart shows exactly that a triple top triangle. What is important is the most recent move up from the May 2016 bottom is clearly A-B-C-because of the wave B triangle and therefore not a new rally like what we witnessed in 2014-2015. While nothing is right all the time, Elliott wave patterns because of their implications tell you a lot about probability and the existence of a running triangle puts high probability in favour of wave B, meaning that the move up is 3 waves and the final push within a triangle. This triple top should have a high probability of working. And from that I draw that so should the dollar index.
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US 30 year T BondsUS 30 year Bonds - have been in a decline and in wave 5 for a while. Amidst the most negative sentiment it has now formed an ending pattern at the lows with a small positive divergence in the RSI. Once a move up starts it should retrace a lot of the losses in wave 2 up of larger degree.
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CopperWhen copper was at 2.10$ at the lower end of the triangle breakout and I was repeating bottom every day I was told that fundamentally it is not cheap because there is no demand. I became double bullish. See prices are never low on good news. Prices are always driven lower on bad news and negative sentiment and that is why no one gets it. By the time fundamentals change it is much later. So yesterday I saw a note that says that prices have moved up too much and will correct, as many mines would become active above 2.50$. Well clearly I do not understand all that because it is not behavioural science. Sure we can see a pause here for a while but once we breakout of the falling channel and sustain above 2.56$ then we have broken out of wave D into wave E. Very old readers will remember me drawing this wedge a few years back at 3.0$ odd but then prices broke down. But the reason to consider this was the same. If 2008 was the top of the 5th wave then what was 2011? If it was wave B of an expanded flat [sorry I have to get technical here], then the fall from there to date should have been 5 waves [Wave C down is always an impulse], The only alternate is that an ending pattern is forming. Now not many thought in 2009 that Copper could make a new high in 2011 [not even me], so now if wave E wants to go to one more new high above 4.55$ with the upper trendline at 5.6$ you would say ROFL. But this is the chart and you go Figure out why Copper goes to 4.55-5.5 before the deflationary top of the century. And that is why I have been tweeting that I am long inflation.
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CrudeI am in a shock and Awe mood today - maybe I got off the wrong side of the Bed. But Crude has spent quite a while in the right shoulder of a inverted Head and Shoulders that most can see. And most Including me would think that it can go above 52 top 62, near the high made in the first quarter of 2015. But really the measurement target of a H&S based on the classic Head measurement, and adding it to the neckline points to Voila - 98$, HA!, did I hear ''That's impossible stupid'', sure and so was 25$. when we were at 105. Enjoy the ride. Of course the monthly averages and Bollinger bands will pose a strong resistance at 60$ but if we get past that you should be looking out the window. But here is a EW target. C=A is near 75 and near the 20 quarter average. yes that is more believable I think.
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Soy MealSoy Meal - after a long pause starting the next leg up of what should be a larger degree 3rd wave. III of 3 up starting. Long way to go beyond the 432 wave 1 high.
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CornVery little downside to corn. Multiple bottoms complete. Daily momentum is in buy mode again, as prices broke out of an ending pattern. A major wave up could start here, a third.
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CoffeeCoffee - higher tops and bottoms all year, and again retraced 61.8% to the lower Band. Wave 2 of 3 should be complete and 3/3 up should start. 200 possible if the 3rd wave is extended.
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CRB IndexThe rise of Oil/Energy plays a large part in the CRB index movement. So the recent up move has triggered short term momentum to go into buy mode. The weekly chart looks like a wave 2 consolidation is now complete, and wave 3 up has started. This should be the next major leg up for commodities as a whole eventually as they tend to move up as a segment, apart from short term lead lag effects. This remains a Long Inflation trade. For H&S lovers I have drawn a blue neckline at 191.50 as well above which we get a breakout from this pattern for 220 or higher in the months ahead.
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SugarSugar Prices on Ncdex are in a corrective phase as are global prices. Note that Sugar completed an impulse so a deep correction is normal and in that sense so far we have not done much. The recent ending pattern might only mark wave A of a zig-zag, and we therefore bounced back in wave B. Wave C down should break the head and shoulders neckline near 3355, and head lower. C=A=3086, and the head measurement target is at 2870.
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Soy Oil NcdexSoy Oil on Ncdex continues to inch higher and has clear higher tops and bottoms. Consider trendlines at two levels. Near term the blue lines are taking prices higher and the upper end if the highs is at 720. Once we breakout and sustain above 720 the larger set up would indicate a retest of the highs and the next trendline of the highs is as far as 925. The 2012-2015 correction in Soy Oil was corrective and therefore should be over. The momentum on weekly and monthly charts is positive and not overbought either. Near term support is 674 and 668
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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.
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