The Truth About The Dollar

Published: Sun, 05/16/21

If the gyrations in global markets had you worried recently then think about why our markets did not respond in kind. While US inflation ticked up domestic inflation actually ticked down. That might not be the only reason though. What is clear for the month of May is that sector and stock specific positions paid off and Nifty did not, again. So there are times when reducing your exposure in the index is a good thing. Accordingly we also should not lose sight of what is happening in the dollar as a gauge of global liquidity. The dollar has been falling off late apart from short term bounces. Central banks show no intention of moving away from a policy of negative real interest rates, including the RBI. So the only near term risk has been the slowdown from the Pandemic but once that news flow improves markets will take a turn for good and head higher.

Rohit Srivastava

The Truth About the Markets

Today's Updates are below

Tesla

Tesla is proving to be a tough nut to move. The bounce is increasingly looking corrective in nature after breaking the rising channel. So after the 5 wave advance the stock does not want to extend any more it would seem. The fall could manifest into a larger correction in ABC, where wave C would go below the wave A low. C=A is at 466.

Nifty PSE Index

The Nifty PSE index is on its 15th positive day. Despite that, I don't think the move is a complete minor wave iii is going on. But there could be many extensions because we are in wave 3 of 3 overall and wave 2 of 3 was a deeper retracement. So while we are close to the point where 3 = 1 is near 3690, Fibonacci extension to 161.8% would take this index towards 4166 in the coming weeks. In short public-sector stocks are likely to remain in focus for a while.

Dollar Index

The dollar index has bounced back to the 20 DMA resistance at 90.80 but nothing has happened to change the earlier view that we may be bouncing back in wave c of 2 of an expanded flat, meaning that we should 1st go to 91.60 before heading much lower.

USDINR

USDINR is falling in 5 waves, where it is possible that wave iii was small, and then one final dip in a smaller wave v down will complete wave 1. Wave v cannot be larger than iii so it should end at or before 72.87. If it extends beyond 72.87 downwards then the wave count will change to an extended decline and a free-fall toward 71 or lower. A five-wave decline up to 72.87 will end wave 1 and we get a small pullback in wave 2 before wave 3 down unfolds.

S&P 500

The S&P 500 bounced back above the 40 day EMA, and the daily momentum indicator has fallen back below zero. Both provide a good setup for the next leg higher to start. A move back above the blue line at 4135 and above the 20 DMA at 4170 should add weight to the upper trend

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Rohit Srivastava
www.indiacharts.com
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