Copper

Copper prices are bouncing off the trendline from the March bottom at 3.49 and remain inside the channel whose top end is at 4.30 and rising. the Vth wave from the Oct low was truncated and did not achieve equality. But wave 2 of 3 may be complete in a small a-b-c. Wave 3 is subdividing and 3 of 3 up would mean going back to the top end of the channel near where 3=1 at 4.60. This is an extended trend. Further confirmation of this move is above 3.65 and then from daily momentum indicators. The marking from March for the larger waves is, therefore, 1-2-1-2, and 3 up next as I was explaining in this evening's video.

VIX Bets Break Records

2 years ago one of the big data points was record VIX shorts i.e. traders were selling volatility like on steroids and it did get followed by a VIX spike in 2018 when banks raised the margin on some of these positions.

Now the chart below from Twitter indicates the opposite ahead of the recent VIX spike. Long positions on US VIX futures hit a record, via investments in this VIX ETF. What does this mean? I am still thinking. This is a bet that volatility will rise. Does it imply that everyone is taking a bearish bet on markets? Looking for an answer.

Financials have not topped and The Grand Supercycle Top

The pain point with the Bank Nifty is that it is a 12 stock index and that makes it too skewed. So on the long-term chart, there were a few wave counting issues but they are resolved when looking at the BSE Finance index that looks very similar visually except that it is a 105 stock index. The chart below depicts what I think. Wave 4 long term ended in March 2020, wave 5 is going on and this month's decline is wave IV of 5, and V of 5 is still not done. So this cannot be over from this point of view, even though Nifty on the monthly chart appears as if 5 waves are done. Same problem with sector indices, the EEM index, DXY, commodities, etc which are all showing wave 2 of 3 for this correction and 3 of 3 up next.

Overlaying the same wave count on Bank nifty it looks like below. Wave 5 goes to the top end of the channel near 40800 or as far as where 5=1 near 66600. On this chart 3=1 as well.

The second problem I am having to address is that many of you are trying to send me EWIs end of the world tweets and messages. They have that message even since Robert Prechter wrote the book 'Conquer the Crash' in 2002. The theories in that book on market behavior are right and that deflation means a rising dollar is also right. And the most important was the tagline "All the Same Markets", used to emphasize that liquidity was driving up and down all markets together, not just global equities but commodities EMs and Precious metals.

So let me start with the chart below from the Global Market Perspective from EWI on the world index, they agree this rise is wave 5 and not a B at a world level and that 5 waves are not complete. Still, because their daily reports focus on finding the end of wave 5 every day, that is all they say and tweet. Also, their view requires the dollar to rise so they do believe it will at all points of time, even as it has not for 9 months. Their wave count for the dollar in 2018 has been changed again and again to allow for the dollar to rise even as it does not. So I understand their factors and watch them with my own daily lens. I will agree when my charts agree. Also if the US is to crash then their own view of wave 3 of 3 for EMs and Asia as published in the Asia Pacific Financial Forecast cannot be right. Not on an immediate basis. A massive 5th wave end that starts tomorrow morning meaning that the Dow will crash 1000s of points, cannot happen without taking down Asia based on Prechters' own "All the same markets" theory and so Asia then cannot be in wave 3 of 3. So one of the two is wrong. Asian and EM markets in a 3rd of 3rd bull run I agree with, and so I think EWIs Dow view is wrong as of now. His world market index view below maybe right except that it should be open to extensions too as it looked like 5 done a few times before and extended as well. When the 5th wave ends for the World index below so will it for EMs and the Grand Supercycle will play out, but maybe not tomorrow morning. Unless there is more evidence that a major reversal has indeed taken place the trend should still be up.

Inflation data starts to cool off with the New crop

As we head into the Budget Retail inflation has dropped in Dec, and by the weekend RBI will look at Jan's data as well and maybe ready to resume its rate-cutting trend. This is essential for the government to extend its spending plans. The second requirement is speeding up the privatization drive already announced in May 2020. Lower interest rates are going to keep a trigger on spending and borrowing, pushing for credit growth to make a come back. This is a positive Macro after a long time for financial markets.

PSU Bank Index A changed world

Nifty Public sector banks index calls for a change in wave count following the announcements today. I was thinking the advance is an X wave but now changing it to 5th wave truncated at the Oct bottom along with the PSU sector and an impulse up starting. This means that wave 1 and 2 completed recently and wave 3 up started. 3=1 is near 2800 but can also extend to 161.8% of wave 1.

Nifty PSE Index

The Nifty PSE index of public sector enterprises ended a second wave at a 38.2% retracement. Wave 2 ended and wave 3 should start from here where 3=1 is at 3875. 

Canada

Taking a deep dive into the long-term chart of Canada. The 2020 top ended up being only wave B of an expanding triangle in wave 4. The subsequent rally then should be the 5th wave long term which is in its early stages as we can only mark 1-2-1-2 on the chart and many more waves left before we can say that a 5 wave rally is complete on the monthly chart. The top end of the rising channel goes all the way to 25,000 and we might get there eventually in the coming years in wave 5.