Market Grind - IC News

Published: Fri, 08/28/20

Dear ,

The great Rotation goes on. Its Friday and the last week of the month. Markets make another new recovery high backed by continued rotation from one sector to another. This week it was clearly from Midcaps to Banks. The move in banking does not appear complete

Add to that a change in mood on behalf of FIIs that have been quiet or slow in their purchases. In fact in index futures they have been shunning meaningful long positions for a long time. So the chart below shows a new 1 year high in positions at the start of the new series as a sign that maybe they changed their mind toward India.

The real question is Have You?

Among other trends the continuation of the oil rally is a surprise and carries risks of future inflationary pressures building.

But global stocks like inflation and are roaring.

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Rohit Srivastava

The Truth About The Markets

Apple Computer

Apple Computer [AAPL] on the yearly chart shows that it may have started wave 5 of a long term advance where 5 = 1 points towards 1625.

Drilling down to the monthly chart we can say that the 5th wave has started its initial subdivisions

Finally looking at the daily and weekly setups we can look at the subdivisions from where this recent rally started in March 2020. The trend is developing a 2 degrees. The 3rd wave itself is subdividing into a 5 wave rise where III=I goes to 592. At a larger degree wave 3=1 goes to 670. The Elliott wave model suggest wave 5 long term will develop in 5 waves up and we are in wave 3.

Crowdstrike Holdings

CRWD - you can apply Elliott waves to anything that moves and has emotions. Emotions come from wide participation. The length of the projections you make is a function of amount of data. This stock from the March 2020 low on weekly charts looks like waves 1 and 2. Wave 2 on the daily chart below is a flat in A-B-C so can we start wave 3? Such flag breakouts do sometimes give false signals in bear market rallies. But otherwise are as strong. Wave 1 was 280% so if wave 3 does the same thing we end up at 350$. Time will tell we have broke out of the flag so far so till we remain above 114 its wave 3 in progress.

FIIs Changing Mood

After a long haul you may say that this is a change of heart. FIIs at the end of yesterday hold a 70,000 contracts long position in index futures. This is not the largest but this is the highest in over a year since PM Modi was reelected. FIIs reduced their long positions ahead of the election and ever since have not held a position of more than 50k contracts. At that level markets mostly topped out. This breakout then is a change in trend and mood especially on the first day of the new series where people are fearing the impact of the new margin system. The last peak in positions was at 123972 contracts in April 2019. Before that we have only seen major tops in positions over 200k contracts. We will continue to watch how far this change in mood takes us. After all in March FIIs had the highest short position on record in the data since 2012. So that was the most pessimistic reading ever. Now we are going the other way.

Crude

The 20dmna at 42.10 is the trailing support for crude oil. If prices have to continue higher we should not close below this.

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Rohit Srivastava
www.indiacharts.com
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