12 February 2019

The Emerging Market Crisis is slowly making its way back if the rising dollar is anything to go by. Today everything was mixed as commodity prices pared losses on the back of a bounce in Oil, yes bounce. And most Asian and European market took positive cues to rally. But the longest winning streak in the dollar should be taken note of.  Even in India as Indian equities took note of it USDINR was actually down a lot which is not usually the case. The INR has been getting stronger after the RBI policy meet but I will not throw in the towel. A weaker currency is more likely in the months ahead. Too many moving parts you might think and that is why it consumes my entire morning in publishing  "IC Mornings" to subscribers. Here are some of the updates from this week.

Copper Copper prices hit the blue line and sold off. So the move up appears complete, waiting for daily momentum indicators to confirm a reversal.

 

Dollar Index The Dollar index found support t the 40 week average again like it did in September. The RSI also made a similar low at 50. Prices should slowly move toward the yellow line of the last two highs near 98.10.

 

Market Breadth The 40 day A/D ratio clearly shows a negative divergence for the entire period from 20-Dec-18. The 40 day means a 40 day moving average of the A/D ratio. So it made a lower top when the index made a higher high last week and then fell to a lower low. This remains a broad based bearish signal of market internals.

 

EM Currency crisis 2.0 The EM currency index completed A-B-C and should now fall with the dollar rally. The rise mostly wave B [or 2] retraced 50% of the first 5 wave decline. Another 5 wave decline equal in size has started and should go far below the low of wave A. WAve A was a 9% decline in the currency index. So another 9% fall may have started.

 

BitCoin Bitcoin - is in wave 4. Will it develop as a flat and goto 4600 or is it forming a triangle with upside capped at 4000 odd? We do not know the answer. Wave 4 is not complete so we have to wait and see what develops.

 

NCDEX Futures Index NCDEX Agro commodities Futures index has ended a 3 wave rally and started to decline impulsively. Ao again after months of being bullish on Indian Agro it is time to give up and step back. A steep correction is setting in on not just local agro prices but international agro prices as well. Follow up action on the upside is missing. So be aware of it and manage risk. My preferred view is that an expanded flat is forming. Wave B in a box is 138.2% of wave A and we started to fall in 5 waves that is wave 1 of C. A five wave decline in wave C will take us below the wave A low and C=161.8% of A.

 

THE TRUTH ABOUT THE MARKETS !