Small Cap Stocks The dollar and Risk Off trades

Published: Fri, 01/25/19

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The Truth About The Markets

25 Jan 2019

The following posts this week on Indiacharts convey a message that Risk Off is back, The US bond and Equity markets carry a relationship that has an advance message. even then many markets rallied this week but not Indian stocks. the Small cap index was leading the way lower all week long and is signalling a new crash in stocks. Will the Nifty follow through. the Social media gang sayd 12k first but we ended the week with another engulfing bear candlestick pattern a third in this trading range near the 10900 mark. This has become a major hurdle. Add to that the USD or dollar starting to rise again. That is exactly how we started 2018 with a rising dollar, and again 2019 kicks off. Read On...

Euro

Euro - fell in five waves and paused for wave ii up, with the resistance at the 20dma at 1.114 and iii=i down to 1.117 and 3=1 at 1.098. The fractal set up is for more downside than upside for now.

euro 240119

Small Caps - The lost Decade

The BSE Small Cap index completed a triangle typical of wave B and is starting wave C down. Do not be surprised by the complete collapse of small stocks, that might take up to a decade to recover based on the history of winter effects on stock prices. For now this leg goes to C=A or lower

sc240119

USDSGD

USDSGD - after a 5 wave rise in wave 1 long term wave 2 has been in progress for many months and wave 3 up is due to start anytime. A near 50% retracement is complete. A move above the 40dema at 1.363 and a breakout of the falling channel above 1.367 would confirm the start of a move higher.

usdsgd250119

USDAUD

USDAUD had a big spike in wave v of 1. Not sure what caused it but it is there. A 3 wave correction followed and a triangle marked in blue is in wave c of 2 before wave 3 starts. We are in early stages of wave 3, where waves i and ii have been marked. From the low of 2, 3=1=1.50. Most currencies are now aligning slowly with the strong dollar view discussed in the last few days and yesterday the DXY did make a new short term high.

usdaud250119

Dollar Index

Dollar index - found support twice at the 40 week average and closed above the 20 week average, the RSI made a double bottom and momentum was back at zero. The next major resistance on the upside on weekly charts is at the upper bollinger band at 97.60

dxy250119

Risk Off Risk On

The risk on risk off risk parity trade has been highly correlated since the Oct top. And now again after a 3 wave decline in wave B for the bond market maybe we have a good set up for another risk off trade for US equities.

riskoff250119

Mexico

Mexico rallies in 3 waves and starts to decline again. Another 5 wave decline in a larger 3rd wave down of a bear market may have started. The rising channel line is at 42340 below which the wave 1 low at 39271 would be tested and 3=1 goes to 34718 from the recent high

mexico 250119

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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,
targets are based on Fibonacci maths and are only indicative of what the mathematical
model throws up. This is not a recommendation to buy/sell.
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