Gold .. what next

Looking at Gold (Weekly and Daily) Chart. It’s trend lines.
It’s EMA (50-day, 200 and 350 day), Long term Stoch and RSI patterns.
It recent breaking down off short term support lines and long term support lines and EMA support levels.

I think there is a decent chance that over next 2~3 months gold should touch 830~860 mark, form base in that region, new support before climbing up again by this yearend, to reach new peaks.

So those considering buying gold, might want to wait for such corrections to 870 region, and start to gradually accumulate. Those who have better clarity and right patience, may want to look for clear signals of bottoming signs and buy gradually towards next uptick.

Enjoy the Game.

US Markets : Critical Juncture

US Markets : Critical Juncture

I am looking at the charts of US markets (NASDAQ, SP500, DJIA, etc.), their technical indicators and volatility indices (VIX, VXN). It looks like that the US markets (after recent up-side bounce) are reaching an interesting point of resistance lines, from where is they are more likely to move down, to either test last lows or make new lows.

So, If this week’s action starts down, for those considering buying short positions (through ultra-short vehicles like QID, SDS, DXD,… or other vehicles) might want to consider coming days, as the right time to do so.

Now this is assuming, that the recent bounce is over. BUT it’s also possible that markets budge this resistance point and continue to move up. So if markets bounce big from here (i.e. crossing the resistance lines on upside on a good volume), then it’s better hold on to your plans to initiate short positions. And wait untill another buying saturation becomes visible on the US indices charts. We will keep a watch and update you all.

For now, play this with confirmation of upside/downside volume, as direction becomes clear.

Enjoy the game.

Indian Stock Markets.. Technical Outlook

Looking at the above chart (Weekly and Daily) of Indian Stock market.. Some questions start to emerge.

Where are the Indian markets headed from here. (After 25% correction from peak in Dec-07) ?
considering the following factors
1. With outlook for FDI and FII investment into India, starting to slow down in recent past, but is slowly re-establish itself in coming years/months.
2. With speculative bets off from the market scene during recent correction. And more Long Term investment players staying in.
3. With high-inflation and thus liquidity crunch likely to be introduced into the Indian financial markets (through : CRR, interest rate increases, etc.), could market rise further.
4. With Western economies undergoing ‘recession effect’ and thus stock markets expected to correct sometime over the upcoming Summer/Fall months, would CH-INDIA and SouthEastAsia (SEA) undergo similar downside.

Do these charts offer some answers On future trends ?
Probably not. As such charts don’t reflect how future fundamentals will drive such action.. unless institutional accumulation/distribution signals are available.. future direction is tough to gauge.
However, charts do offer some guidance on current sentiment and thus PROBABILITY of likely future action.

Currently, these charts show that:
1. The BSE has crossed LongTerm Support lines. @ 17K.. These long term support lines might become resistance lines going fwd.. unless that’s broken on the top side on high accumulation volume.
2. Sentiment indicators show bottoming up of bearish sentiment.. or the market is close to formation of short term bottom.
3. Markets need to form acute bottom levels with some 2nd round of capitulation (which might happen this week or anytime in coming months), should show negative MACD divergence on bottom side for confirmed upside action to sustain.
4. So once these technical factors clearly show ‘bearshih exhaustion’ over next few months, there could be a short term bounce from 14.5K~15 K levels.
5. Long term action would be based on key fundamental drivers – like Corporate earnings, earnings growth, inflation, interest rates/liquidity, International interest (esp. FII), election year effects, etc. Since confluence of these factors put together is not expected to change in big way.. major upside change in earnings growth is not expected. Most of the current growth is captured in the market.
6. However, over next few years.. as corporate fundamentals move ahead of the stock, markets might catchup again.. so in 2010~2011, BSE might touch new highs.

So some uncertainty, but NOT A BAD TIME TO START CONSIDERING BUILDING LONG TERM PORTFOLIOs, once next round of capitulation of negative action is seen. No clear guidance for now.

Enjoy the Game