Shock and Awe - Trump creates more Volatility

Published: Sun, 10/04/20

Dear ,

After a violent month it looked like bulls capitulated into expiration and caused a near term bottom. This can be seen in the significant decline in Nifty futures open interest after expiration. Now will bears create the room needed for short covering by selling every rise? Banks got the much needed relief from the government indicating that the burden of interest on interest will be born by the government itself.

News and events are definitely helping create volatility. For example will Trump make it and is the stimulus plan enough? One thing is clear irrespective of who comes to power at the top in the upcoming US elections, there is going to be more stimulus and a spending plan for Infrastructure. In other words rest assured flow of funds is here to stay. The news flow then around winners and losers is more sentimental.

History so far holds that every US president completed 2 terms before the incumbent was voted out. Will this time be different. The ratings show a close fight so far with no clear victors but then that was also true in the election 4 years ago.

US markets also tend to mostly lose momentum ahead of elections so do not expect too much action there except for day to day news reactions. how our markets will end up doing will then depend purely on what charts of Nifty show. Read the weekly Elliott wave update already published online to understand this.

Below find the last few updates on commodities as they were quite volatile around the first US dollar bounce that we got in Sept. the dollar index closed down for the week after a 3 wave advance. unless that changes a 3 wave advance is corrective in nature and could mean the dollar resumes its decline.

Rohit Srivastava

The Truth About the Markets

Today's Updates

Silver MCX

Silver appears like a-b-c down complete at 56020, yesterdays low. Let's see how it develops. Holding this low we should see higher prices from here. The Elliott wave marking is still wave 4 down.

Nickel Futures

Nickel is attempting to move up for a breakout of the falling channel or flag pattern, where the breakout would confirm above 14820. Prices have also been going up inside a channel and the top end of the channel is at 16500. I am not putting waves on top of this yet as there are many subdivisions.

Aluminium Futures

Aluminum completed an A-B-C decline in wave 2. where wave B is a triangle. The entire pattern is zigzag. From the low of 13670, we should resume the upward journey In wave 3 up that should initially try to get back to the wave B end point of 14740. Above that, the wave 1 high can be put to test at 15545. Eventually, if we confirm the 3rd wave based on the impulsive nature of the rise we can project 3=1 to new highs.

Gold MCX

The daily momentum for gold MCX crossed over to the buy-side and you only need to get past the 51,000 mark where the 20/40 day moving averages lie. After that, the upper band is at 52,345 as the next resistance.

Copper

Copper - counter-attack, and I was wrong yesterday. But last week I did once consider that wave 5 could have ended and that takes precedence. This chart shows the 5th wave as an ending pattern and so far c=a on this chart is already achieved in a day, and 23.6% retracement is done. Now we have to wait and see if wave c extends or not. The wave 34 low near 2.76 is an open case.

Remember, ever since the dollar started to bounce it caused stocks and precious metals to sell-off. In between oil had a knee jerk reaction, and with a lag now copper. But metal stocks in India have had 50% retracement in the metal index and metal prices are only falling now. So there can be a divergence between various assets. But eventually, they are all correcting and will restart the larger degree move higher despite the near term divergences.

Coppers entire 5 waves up is a larger wave 1, now the only question is where does wave 2 end? and can it end this soon? The 20-week average is at 2.80 below which prices extend for a deeper retracement and above it, we continue higher into wave 3.

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Rohit Srivastava
www.indiacharts.com
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