Dear Members,

Russel-181016

The US Small stocks index the Russel 2000, should be key to watch over the next few days as it recently broke below both the blue rising trendline from the FEB bottom and the yellow neckline of the expanding top pattern. Having done so we should see an expansion in the decline in the coming days ahead.

Gold Bugs Index

The AMEX Gold Bugs Index [HUI] momentum turned positive after a bottom near the lower end of a falling channel. A three wave correction in a-b-c appears complete after a positive RSI divergence. Wave 3 up may have started. A breakout above the falling channel is above 228.70

The Chinese Bull

Is the China bull back? It would appear so on this chart. At the start of the year I highlighted that 78.6% is retraced. I have been open for a while to the idea that one more new low would occur after a 3 wave advance but clearly that is not happening. So the best alternative here is to think that the recent higher top bottom formation is a series of impulses indicating a much higher China stock market in the months ahead. Now remember China and the Shanghai index are a song of their own. They never bear a correlation with world markets except when the Media tries to make you believe it to be true.

This goes way back. It was in a bear market in 2004 when all other markets were rising and then rose later. It was in a bear market 2007-2014 and was at far lower levels than the rest of the world markets. So its soft Landing was done in 2014 itself. It rallied impulsively in 2014-2015 like any bull market does. So at 78.6% you have to consider bullish options. With the CNY devaluations being favourable there maybe other triggers here as well. Yes I would rather buy China than India here.

Brazil Bull Market

Brazil has also been unique. It remained in a falling channel complex bear market from 2010-2016. And now it has broken  out of the falling channel. This should be a new trend altogether that will not end till 5 waves up are complete.

Rice

RICE prices have again taken support near the neckline of multiple Long term support levels. We are at the fag end of a long corrective phase in Rough Rice prices and it could pick up into a upward trend soon.

Wheat Ncdex

Wheat Ncdex prices are rising in a channel. Recent support was at 1735 and the next resistance for wave III up is at the 1950 mark.

Midcaps

The Nifty and Midcap indices have diverged for long however till we break this rising channel the trend down will not take shape. Till then we can continue to extend higher as we have for 7 months now.

Crude

Crude stops rising at an important level. The recent move up from 43$ has completed 5 waves up for now and can be wave c of a 3 wave advance. What makes this important is that prices stopped at exactly the neckline of what many may think is a inverted head and shoulders bottom. It may not be. A 3 wave rise ending at this line can also mean that a triangle is complete as shown and that can be bearish so a fresh move above the 52-53 levels is needed to discard the bearish potential. Failure to breakout could mean that the next move down starts form here. Daily momentum indicators are already in sell mode and initial support is at 49 and 48. The rising trendline for the a-b-c rise is at 45.82 below which the bearish case would be even more strong. Holding these support levels we will watch for a fresh move up towards 60. Breaking them especially 45.82 would strengthen the case for a move down to below 40. 

Copper

Copper remains at the lower end of what looks like a triangle waiting for support to come in at 2.87$