Outlook 22.08.11

There is difference between 2008 and 2011 market and on the background economical situation. The main point was that time big commercial houses failed mainly in US which lead others to become slow, but this time in EU zone countries govt are may in pressure due to huge debt including US but one thing is very common that’s fear.

In 2008 central banks put fund to protect but employment and housing unable to improve mainly in US but only financial market.

Some EU countries are in huge debt, taking breath with ECB bailout fund with a precondition to reduce deficit and likely to impose more taxes on citizens.

Corporates started to slash its manpower from months back in US and possibly in some places of EU and People are concerned.

Even at 2008 n later China bought US and EU countries debt and now under pressure although; …….Joe Biden on Sunday rejected views that American power is waning and said Washington would never default and still the single best bet in the world, in terms of where to invest as per cnbc.com..…

Egypt like agitation by people is rising globally, conflict between countries remain same.

 All the countries are busy to protect their own currency and question about reserve currency and enough warning for a cold war state.

This weekend we’ve to cautiously watch what Mr. Bernanke is going to tell as market expectation is approx 50:50 condition regarding QE.

GOLD: all these points boosted gold historically and end is not visible yet. But any settlement above $1900 with a good day movement can push it to major psychological area of $2k.

SILVER:  the typical silver movement as sent a report on 08^th aug and now cleared it was a bear trap (in globex) as shown on that. Strength in silver is seems back and base has completed on $32/$33 area, nearby res $45.5and $47.5 and sup $42.50-$42.70.  Possibly we are going to get a sideways movement for few days within $47.5 and $50.5 and looks is challenging for a new record and according to extended fib it would be $59 and $78. 

Outlook 04th Aug'11

Global growth scenario darkening erasing hope of recovery and major equity indexes are correcting steadily and showing a possibility of downward trend is on the way at least for short to midterm although market is hoping for united approach of all govts and central banks. This time it may become bit difficult which may gold movement is suggesting.

GOLD: yesterday it made a record of $1675.9 (only a step far to reach $1700, long awaited target came earlier which expected till year end next expected areas are $1900 and $2300) and till now holding a narrow range of $1660-$1674 and showing more strength. From some sources words are coming as margin is going to be hiked and if so, it can trigger some liquidation and we‘ve to be cautious for near term but for mid to long the bullish trend‘ll be intact. Suggest to stay long with stop below $1658.

SILVER: it’s giving a bullish movement but in a different which sometimes looks like weakness. Yesterday it managed to settle above $41. What I’m thinking this movement can lead silver above its all time high of ($%0) which ‘ll be a very sharp and stiff. Suggest to stay long in silver keeping a stop $41.30.

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NIFTY; an expectation

On daily basis spot nifty has given a double top confirmation (5750) from one angle and from another angle moving within a secondary bearish channel.

One suggests fast downward price movement and other suggest lower low and lower hi. From both angles can expect lower prices.

If we see last few days movement after giving the confirmation settling below 5750 on 14^th Jan’2011 unable to attract fall rather holds the area and moved within a range of 5625-5750.  On 25^th Jan broke resistance of 5750, hits nearer resistance of 5800, but unable to sustain and moved down and closed on sup of 5680 which indicates weakness.

Now what can expect, sup of 5580/85 (declining lower line of channel, ‘ll be lower with time) need to break instantly for a sharply downward move otherwise to be within a downward channel, bit sideways within a channel forming lower highs and lower lows, either way 5000/5100 seems achievable.

This downward price move is likely a balancing of value or cooling overpriced stocks in global scenario. 

market: a look b a c k

Thursday, 01July 2008, (DOW, what is next), I wrote and first posted in Blog after getting a suggestion from our senior Mr Venkat……………..thank u sir……….

Now at present juncture DOWJONES covered its losses after the fall from the area it given a technical confirmation (pls go through the page).

Now the question is where it’s heading, for a new high, near the all time high or what?

QE is giving enough support, banks and corporates are in good shape but housing sector still down, employment also not gathering pace, unemployed are more, as a whole lack of any solid clue of growth but for hope nothing will worsen and huge fund with fund managers, ETFs’, index funds, it’s a rally as market is showing surprising strength (corporate earnings on the way).

Worrying situation is global geopolitical condition, economic power shifting leads to currency war even points to geopolitical tension, which can be worsen anytime and can make panicked. Soaring commodity prices (one reason is mother’s slap for spoiling balance) threatening inflation and in emerging countries it’s already showing red eye and pressuring growth.

Surprisingly all this points attracting investment in COMMODITIES, specially in metal sector. So wouldn't it be like ‘Hero Honda Ad’…… ‘Fill It and Forget It’(?). 

IS GOLD GLITTERING?

GOLD sharply higher on Fri,21Nov'08, able to break $768 and as soon as broken convincingly reached next area very fast and settled $791.80 after showing a high of $802.8, whereas spot gold closes $801.60, some hours later pit closes.

Some reports like World Gold Council showed Q3 of 2008 consumer demand was 249.5 tonnes, which is 31% higher than Q3 of 2007.

Some short covering, switch over of option expires and some opportunity of buying in the weekend before Thursday 27Nov'08, thanksgiving day holiday in US, taken prices higher.

At the same time, there was a criticism by former president of Iran on Friday on the comments of chief of IAEA.

Other counters like Dow Jones, Silver, Crude oil or Copper doesn't support Gold move higher as such on this Friday apart from some short covering or profit booking in the wekend.

DOW JONES broken last weeks low, on Friday made a new low of 7449.38 and after covering some shorts, closed at 8046.46 parallel to other major indices of world. Breaking of resistance 8495-580 can create some volatility and upward movement.

SILVER was within last weeks range and apart from sympathy buying with gold lately, didn't do much and able to kept it within a rectangle formation on weekly chart. Breaking of nearby resistance 986-88c can create some volatility and upward movement.

CRUDE OIL could be able to push higher with the event of biggest hijacking ever and farthest from Somalian shore of a Saudi Arabian supertanker carrying $100 million of crude. However, market discounted this event and made a new low of $48.25 for Jan'09 contract. Natural gas fallen below $2 after march'05when Dow Jones was 10805.63.

COPPER is also alike Dow and silver made a new low in this week, touched July'05 lows and didn't make any sign of turn back, only some little short covering at weekend.

I personally not very much optimistic about gold here at this price area even as an investment tools. Any sign yet to get about world economy to be corrected from here rather situation probably different. After US and EU, Japan has also entered into recession. China is in deep trouble with job cuts and slowing economy and before election, condition of India is not very clear but economy is slowing and unemployment is rising. People fear about recession and deeper recession but not deflation or hyper inflation, hopefully which global economy can avoid. So possible gold is going to leave this gain very soon if no blunder situation does occur.

Some comparison charts here below, within these, mainly silver is not supporting higher gold which can become alarming for gold, bcause it seems to have offload many longs:

At the end, I'm adding one box of charts, from which we can get eassily the price of GOLD in different currency:

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ECONOMY TODAY AND MARKET

Today G20, group of developed and emerging countries, which is 85% of world’s economy and 2/3 of population, going to meet. The developed countries like UK and US are urging for supporting free economy and resist calls for protectionism. Now people from the globe are eagerly waiting for the outcome of G20. I doubt any magical solution to come out apart from commitment to work as unit with continuation of process.

We have seen only sideways movement week ended 15th of Nov ’08. Worsen condition of global economy as EU entered into recession, retail sales dropping , jobless numbers hitting higher globally and more than that the current situation alarming for deeper recession throughout .

Only hopeful point for industries mainly of US, as crude oil prices came lower $56 area which was expected on last writing of 8th Nov'08. If geopolitical situation is not going to get very hot, then chances for crude oil to hold lower side even high chances to show more low towards $50-51 with a possibility of steady USD but simultaneously it hampers oil producing countries interest, which can create another problem like increasing terror activities.

GOLD: Having the same idea just like last two weeks and expecting

sideways to downward movement . Possibility to get a triangle or rectangle formation in this area. Nearby resistance is $768 and major resistance will be $788/92 while support will be $680/82 and $664/68. Within short to mid term can expect to get $558/38 if I'm not very wrong.

If gold break and settles above the major resistance of $788/92, then we've to rethink because in this worsening economical situation it may happen due to some geopolitical uncertainty as the chances is there as mention before.


SILVER: The great speculative white metal, which is precious and at the same time have much higher use in major category of industries may going to form a clear descending channel pattern on daily chart . This week high was 1054c and low 877c. We can expect another few days to move within 828-38c to1064-72c range. Alike gold it is also may going to from a rectangle on weekly.
Outside of this range resistance is 1132-34c, 1178-79c while support below is 712c and 648-52c.


DOW JONES: Another week of consolidation we just have passed and may have to go for some more days sideways. It fails to hold on the bit positive formation it made as mentioned on 1st Nov ’08.
Nearby resistance 8855-60, 9180-220, 9345-55, 9780 and support 7950-60, 7860-70, 7400, 7100,

Apart from G20 meet scenario and some breaking updates about industries or central banks, the reports which we have to watch mainly as;
JAPAN: GDP, BOJ interest rate decision industry activity index.
EU: trade balance, construction output, PMI and Germany PPI, PMI.
US: capacity utilization, producer price index, industrial production, TIC flows, housing market index, mortgage applications, building permits, housing starts, CPI, FOMC minutes, continuing and initial jobless claims.
UK: consumer price index, retail price index, retail sales, BoE minutes, Q4 money supply.

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Outlook

Big win of BARACK OBAMA in US presidential election, the first black man fulfilling the dream of the prominent leader of civil rights and human rights of US, MARTIN LUTHER KING jr, which matches and proves the philosophy of the great poet of India, RABINDRANATH TAKUR(TAGORE), created optimism with his bold, emotional, and convincing speech of change, not only in United Sates of America but also worldwide .

I doubt there is any magic to solve this economic problem instantly but surely implementation of some good policy possible, which will take time to give fruits.

No positive changes in economical front rather dipping in recession as per the reports. US unemployment raised and wide expectation of worldwide jobless number to increase, only in some countries as Australia was bit exception with surprising employment report which shows as part time jobs increases. US pending home sales of sept’08 was also down as reports shows on 7th nov’08, can expect lower in oct’08 report also because of worse employment and job cuts. These reports spur some more rate cut expectation.

Sideways movement we have seen this week ended in all Dow jones, gold, silver, copper and USD index also which may continue for another some days which may going to form triangle or rectangle pattern. I am keeping the same view with same levels as of now as per last week until some formation is going to be made, with eyes open on lowered crude oil price which possible targeting $56 and lowered international main food grain prices mainly, like corn, soybean, wheat and some others.

Coming week, we have to observe carefully the reports is coming mainly like trade balance of US, UK, Japan, BOE inflation report, GDP of Germany and EU, jobless claim of US, US retail sales.

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Market Outlook(weekly baseis)

Still there is no clear positive sign for the global economy rather dipping. We just completed this weak which was month end at the same time. All the major central banks cut their key interest rates and signals more rate cut is ahead as the downside risk of economy persists.

ECB and BOE rate decision is there in next weak and expectation of rate cut. Possible some more USD strength we are likely going to see.

GOLD: I’m having with the same idea as my last report of lower gold with resistance of $788/92, while it showed a high of $778.30 on 30th Oct08. I am expecting some more liquidation to come.

Immediate support $680/82 and below $664/68. Breaking of $664/68, door‘ll open for $604. In mid term to short term $558/38 on the cards.

DOW JONES: it has given the weekly settlement above 8900, which formed a double bottom with a divergence(RSI), outside candle in weekly, with a positive settelment, which technically push prices higher once, I feel some more short covering and buying was there, which may continue at least for another few days which in turn to lead to long liquidation in gold.

Resistance of Dow is 9800/20, 10335 and 10680/750. Breaking down of 8378/58 can diminish the strength of somewhat positive formation.


SILVER: possible we‘ve to wait more time for silver to get any positive technical formation altough after forming a doji in last week it forms a outside high wave candle. Expecting stiff movement breaking the range of support 828/38 and resistance 1037/39 extended to 1064-72, in other word it may consolidate within the range at least for some days.

Resistance is 1132/34c, 1178/79c, and 1246/48c while support below 828/38 is 712c and 648/52c.

DOWJONES the major index outlook

Already we've noticed the crash of all the markets globally. My expectation about Dow as my last post 'dow, what is next of 1st July'08 ' has reached 8000/100 and showed a low of 7882.

Why I'm interested in Dow, b'coz it's the major index of the major economy and can get some clue for base metals or precious metals even our national stock market. National share indices are fallen almost Parrnell but all metal prices are in comparison higher b'coz of USD/INR weakness but at times it'll get balanced.

What can expect now?? Global fundamental situation is not very much clear, huge panic is there, at the same time technically bottom has not formed yet.

Bail out plans for financial sector, reduced food grain prices(US), lowered base metal and crude prices and worse jobless situation may help industries to get some support at least to take a breath to get more news which can show some further direction.

Next possible support area of 7050/150 and 6550 to take a breath at least. In the mid term 5800/5850 can't b ruled out. Before breaking lows, any weekly settlement above 8900, can boost Dow to push up higher.

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GOLD OUTLOOK (short to mid term)

Big question is whether we can go with gold as an investment tool in this area or not? In my view surely gold is solid investment tool but in this price area within current world economic situation should not.

Within very few days may within 1st half of next week we can see gold to move within a range of $664/68 to $748/52. Immediate support $672/74 and $664/668 and immediate resistance is $737and $748/52.Extreme resistance is $788/92 which should not break even not to touch.

In short to mid term can see to gold break the support area of $664/668 towards $572/76, $558 and $538. Possible a consolidation phase can get after getting this support area of $558-$538.

If due to any reason it breaks resistance of $788/92 and can able to hold above then some different situation can arise, although it’s a slim chance.