Thursday, August 20, 2009

A crucial juncture!

Sensex has formed a Head and Shoulder pattern with neckline near 14700 levels. This level is providing a very strong support and needs to be broken for further negativity
The momentum is decreasing everyday but it is imperatve to get a price confirmation
It is amazing to see how not only the global equity markets but currency and commodity markets are moving in a range since past few days. Are we still decoupled???
Shanghai is dragging down most of the Asian pacific markets along with it and should lead the direction
Dollar index is moving in a range and should breakout soon in upward direction. This will be bearish for commodities and commodity stocks
We also observe 38.2% retracement level of fall has been reached in multiple markets like DJIA, FTSE 100, ASX 200, 61.8% level reached in Copper
VIX index also looks to have given breakout in upward direction
Baltic Dry index has already started moving down after completing 3 waves up. This cannot be a good sign
Different asset classes (Equities, Commodities, Currency) reaching crucial resistance levels at the same time isn't just a mere coincidence!!! Think about it!

Hindalco Vs. Dollar Index (DXY)
Hindalco looks to be forming a triangular pattern
For negative price confirmation, range of 99 -100 needs to be broken
Also note the close correlation Hindalco shares with Copper and inverse relation with USDollar
Copper (currently at 276) needs to break below 273 levels for some major correction
Reliance Industries

Our target of 1880 is achieved in Reliance!
We asked for initiating short position at 2000 with target of 1880 to 1900
MACD has given negative crossover and is below 0 line. If prices fall below 1870 one can initiate short position again as long as prices remain in the corrective channel.

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