Dear Members,

08 MARCH 2017 

I have been bullish inflation but no trade is endless. So it is not just US markets that are rolling over but also commodity prices. So that means I have to step back on this trade that relates to base metals and metal stocks. Below is a note on the BSE Metal index that I put out yesterday. I do however feel that while the short term reaction of the market may have to do with a reaction in the US stock market the inflation trade might not be over and can easily twist into stagflation. We are also seeing a deeper potential correction in global and domestic sugar prices and this mornings post covers that.

BSE Metals

BSE Metals index was moving higher but stopped. It stopped at exactly where B=138.2% of A. This is a critical level for confirming that we have indeed started a fresh move. The rise so far is not 5 waves clearly on the index and failure at this level [12350] can mean that we are forming an expanded flat before another move up. An expanded flat would mean wave C down to 11100 is due first. So the weakness seen today in Metal stocks might continue a while longer if this turns out to be true. 11834 is the 20dma as the immediate support to watch if the trend up is to hold.

Sugar Prices in the Global market broke the rising trendline of the channel so I am making this change to the chart for now. This means that Sugar prices might be done here and we might see lower prices in wave C down. This would be a zig-zag and can be a deep correction so sugar stocks can also take a hit near term on this. Prices and stocks do not always correlate but it is a risk to be aware of especially if you are trading. Once done we should see a new rally in sugar prices. Till then we will sit back on this.

Similarly I must consider that domestic sugar prices have completed wave 5 at the reccent high. I was waiting for wave 5 to extend more but it did not and this means that Sugar prices on NCDEX may fall to the wave 4 low near 3330 at least. If that level breaks we can bet lower levels. Daily weekly momentum is already in sell mode and 3600 is the weekly average support. 38.2% of the 5 wave rise is at 3200 and 50% is at 3000