DOW Makes a Shooting Star on Weekly Charts

Dow makes a bearish Shooting Star on Weekly Candlestick Charts

Dow has made a bearish candle – Shooting Star – on weekly candlestick charts in the week gone by. Though a confirmation is required on the weekly candlestick charts in this week to confirm bearishness of Dow, there are adequate technical indicators already in place to indicate bearishness of Dow. Bullishness of Dow particularly in the last month or so could be attributed mainly to short covering. Now that Fed has given indication of interest rate hikes (two or three does not make a difference), US stock indices can be expected to drift lower from here, for times to come.

Here are two charts which can give the readers some food for thought.

I also recommend the readers to have a glance at my previously authored posts:

1.    Year 2015 – End of Era – The fading away of USA and USD

http://commoditycurry.blogspot.in/2016/02/year-2015-end-of-era-fading-away-of-usa.html

2.    Donal Trump May Prove To Be Right

http://commoditycurry.blogspot.in/2016/04/donald-trump-may-prove-to-be-right.html

3.    Ace TRUMP and Being MODI fied

http://commoditycurry.blogspot.in/2016/11/ace-trump-and-being-modi-fied.html

Best wishes for the festive season.

The author can be contacted at: riskadvisory@outlook.com.

DISCLAIMER:

These extracts from my trading books are for educational purposes only. Any advice contained therein is provided for the general information of readers and does not have regard to any particular person's investment objectives, financial situation or needs and must not be construed as advice to buy, hold and sell or otherwise deal in any kind of commodities, currencies, securities or other investments. Accordingly, no reader should act on the basis of any information contained therein without first having consulted a suitably qualified financial advisor.

Dow Enters Speculative Zone

Dow Jones with an approx. 250+ points on Wednesday, December 7, 2016, has entered into a speculative zone, exhibiting all signs of an imminent crash very soon.

The author can be contacted at: riskadvisory@outlook.com.

DISCLAIMER:

These extracts from my trading books are for educational purposes only. Any advice contained therein is provided for the general information of readers and does not have regard to any particular person's investment objectives, financial situation or needs and must not be construed as advice to buy, hold and sell or otherwise deal in any kind of commodities, currencies, securities or other investments. Accordingly, no reader should act on the basis of any information contained therein without first having consulted a suitably qualified financial advisor.

Dow 19K - The Kiss of Death

Dow 19K – The Kiss of Death

Now that Mr. Donald Trump is in the driving seat, it is a moot question – To what extent he will be able to steer the economic policies which he promised in his pre-election campaigns.

I don’t doubt his business acumen or competitive abilities to do so. After all he is a real estate Moghul and he knows the ground realities. He accomplished beating the Democrat candidate out of shape to win the Presidential elections despite all odds prevailing against him. That was by any standards a Herculean task and he achieved success.

As a businessman, he is perhaps better equipped to understand the framework of policies driving the US economy and he could perhaps introduce even better policies to drive the growth but as the saying goes, “You can’t flog a dead horse.”

The US economy and the stock markets are at their peak. Winds at the North Pole can only blow towards the South. The Dow is perhaps in its final leg of making higher highs. While the Wall Street may or may not exhibit a knee jerk reaction to Fed’s decision to raise interest rates or not in mid-December, there is hardly any room at the roof for the economy and the US stock markets.

Here are the charts below which indicate that Dow is in its final leg of making highs:

I also recommend the readers to read my previously written posts:

1.    Year 2015 – End of Era – The fading away of USA and USD

http://commoditycurry.blogspot.in/2016/02/year-2015-end-of-era-fading-away-of-usa.html

2.    Donal Trump May Prove To Be Right

http://commoditycurry.blogspot.in/2016/04/donald-trump-may-prove-to-be-right.html

3.    Ace TRUMP and Being MODI fied

http://commoditycurry.blogspot.in/2016/11/ace-trump-and-being-modi-fied.html

My views in my previously authored articles remain intact irrespective of whatever recent developments might have taken place in the US economy or financial markets.

The author can be contacted at: riskadvisory@outlook.com.

DISCLAIMER:

These extracts from my trading books are for educational purposes only. Any advice contained therein is provided for the general information of readers and does not have regard to any particular person's investment objectives, financial situation or needs and must not be construed as advice to buy, hold and sell or otherwise deal in any kind of commodities, currencies, securities or other investments. Accordingly, no reader should act on the basis of any information contained therein without first having consulted a suitably qualified financial advisor.

Ace TRUMP and Being MODI fied

The TRUMP Ace

A lot of analysis must have gone into the US Presidential elections and lots of data and statistics must have got churned to reach the voter banks of each hitherto presidential candidates. A lot of election planks and platforms must have been created to win the elections. That shows the winning candidate must have appealed the majority of the voters and the Electoral College and would have covered the majority of the population in the US to secure the majority vote.

I have a few other concerns which are largely not talked about and yet are very critical for any democracy and the smooth functioning of its political system and the financial markets. These are:

1.    Is the integrity of the Federal investigation agencies intact (without going into the criticality of the issues raised during the presidential elections) or is it questionable?

2.    Is the integrity of the topmost watchdog agency of the securities market intact or is it also questionable? Perhaps to throw its weight around it made two persons of the Asian origin scapegoats in a peculiar case of insider trading a couple of years back. No doubt the persons might have indulged into insider trading but was that case a mere specimen case which was discovered and/ or widely publicised? After that the securities markets watchdog could not catch any other single or group of individuals indulging in insider trading?

3.    Does the topmost securities regulator have enough teeth and wherewithal to catch the big Financial houses who give price/ rate targets three years in advance and then ensure that those target prices are met despite all costs (costs to the ordinary US and global citizens) or surprisingly they are so accurate that all their predictions are accurate to the nearest dollar and fall in place?

4.    Did the securities watchdog ever make an attempt to eavesdrop the Fed and other market participants and could it catch some?

5.    Is the media really free in the US or is it projected to be free in the guise of freedom granted to social media? Or that both operate in different domains and the social media (aka masses) doesn’t even get a whiff of what happens in the bigger influential circles? Or if the likes of what occurred during the presidential elections (referring to the comments of the investigating agency) was something which was a bolt out of the blue and got overshadowed by the hustle and bustle of the Presidential elections.

May be with the newly elected Prez, the America is on the harbinger of a renewed change for the general goodness of the global economy from a holistic view point and not just for the world’s biggest economy.

Being MODI fied

Back on the home turf, the economy and the markets got a double whammy of the outcome of the US Presidential elections and consequential reactions by the global stock markets as well as the adoption of new currency notes.

At the stroke of 8 pm (a famous IMFL), it looked as if the country got paralysed as the intoxicated life blood of the economy got flushed out in a gush and the ensuing process of transfusion of fresh blood in the due course of time would create some troubles, weaknesses and also perhaps paralysis for a limited period of time. Nonetheless the fresh blood in the long run, will heal the economy ailing with the evils of terror and corruption and bring in pre-requisite changes for a renewed vigour and resilience in the economy.

Generating an expanded and larger base of the economy with the help of adoption of electronic money and circulation of higher denomination currency notes, in my personal opinion will lead to a rapid growth in the visible economy. This will be revolutionary in terms of opportunities that will be available for the masses and also the new generations entering in the business mainstream. These opportunities will provide impetus to fresh ideation and entrepreneurial skills through external financial assistance which should at least now be readily and easily available from the banks and financial institutions. I also anticipate that shrinking of the financial base will also lead to invitation of external financing to boost infrastructure and long term projects which are the need of the hour for the domestic economy.

And finally my take from the entire exercise:

1.    One must learn to read the language and the mind of the Indian Premier. The images of new Rs.2000 notes were circulated a day or two in advance without giving the slightest of an inkling of the imminent change in the offing. Had the images of Rs.500 and Rs.1000 notes been circulated instead of/ alongside the images of Rs.2000 notes there would have been a scramble for dumping the black money and the exercise could have met a different kind of success.

2.    Such kind of change in currency notes as and when warranted in the future should happen regularly to keep in check the growth of the parallel economy taking into account the comparison of lost taxes (revenues for the government) due to a thriving parallel economy vis-à-vis the cost of issuing different currency notes.

Congratulations Mr. Donald Trump and Mr. Modi for the new initiatives that will bring in the much wanted and desired results. As someone has rightly said, “The markets may fail but the human beings should not.”

My views in my previously authored articles remain intact irrespective of whatever recent developments might have taken place in the US and the Indian financial markets.

The author can be contacted at: riskadvisory@outlook.com.

DISCLAIMER:

These extracts from my trading books are for educational purposes only. Any advice contained therein is provided for the general information of readers and does not have regard to any particular person's investment objectives, financial situation or needs and must not be construed as advice to buy, hold and sell or otherwise deal in any kind of commodities, currencies, securities or other investments. Accordingly, no reader should act on the basis of any information contained therein without first having consulted a suitably qualified financial advisor.

USD All Set to Rock the Currencies and Other Financial Markets

Ahead of the FOMC meeting, in which the decision to raise the interest rates will be taken, the markets’ mind is already firm. Irrespective of whatever decision the Fed/ FOMC may take about raising or not raising the interest rate, the markets are firm about the direction of the USD and other currencies.

“Does Fed drive the markets or,” is it the other way around, “Markets drive the Fed?”

Personally I believe that, if this time Fed defers the decision to raise interest rate, it will then perhaps lose control over the fresh timing of raising the interest rate because in a window of next three months (till the time the next FOMC meeting takes place), many external – economic and political – factors may take over the Fed’s ability to dictate interest rates. It is “Now or ‘Not for a long time’” situation for Fed this time. So in all probability, Fed will raise interest rates this time contrary to what many market participants are calculating through their innovative and imaginative ‘Probability Meter’. Personally, I am very keen to see this probability model or probability meter.

So, the next set of thoughts which cross my mind immediately is that, that if Fed is aware of the precarious situation it is in and it would not like to miss the chance of raising interest rates, then raising the interest rate at this juncture would strengthen the USD. All the same, when I look at the charts, I get confused.

So I am at cross roads to conclude (with a caveat that I could possibly go wrong) that even if Fed increases the interest rate, the dollar will drop against major currencies. The two divergent events (result divergent of the action), have the capability of bringing havoc to the financial markets.

Given below are the charts of various pairs of currencies:

The author can be contacted at: riskadvisory@outlook.com

DISCLAIMER:

These extracts from my trading books are for educational purposes only. Any advice contained therein is provided for the general information of readers and does not have regard to any particular person's investment objectives, financial situation or needs and must not be construed as advice to buy, hold and sell or otherwise deal in any kind of commodities, currencies, securities or other investments. Accordingly, no reader should act on the basis of any information contained therein without first having consulted a suitably qualified financial advisor.

NIFTY and GLOBAL FACTORS

NIFTY

Nifty has made a bearish gravestone doji on weekly candlestick charts. This is also coupled with a massive open interest build up. Although confirmation is required on weekly charts and the fortnightly and multi-period charts have yet to form an indication of bearishness, the above two factors are indicative enough of the bearishness of Nifty. The fall may be gradual or precipitous with odds heavily favouring the latter.

GLOBAL FACTORS

A couple of other factors also weighed heavily on the Dow and Dax.

European Central Bank did not announce a fresh QE while retaining the rates to be the same on Thursday, Sep 8, 2016. Personally, on hearing the chairperson of ECB speak during the live telecast, I could not feel comfort in his voice though his speech attempted to give a comfort to the financial markets.

On Friday, German exports and imports data (month on month) for July ’16 indicated a drop of 2.6% and 0.7% respectively, which is a significant drop.

Another news which got unnoticed/ ignored during the last week (Monday) was a drop in the US ISM non-manufacturing PMI to 51.4 against 55.5 reported for the previous month. This is indicative of a slow down in growth. A figure below 50 is indicative of contraction in the economy.

On global front, Dow had a near 400 points shave on the last trading day of the week gone by.

CONTACT

The author can be contacted at: riskadvisory@outlook.com

DISCLAIMER:

These extracts from my trading books are for educational purposes only. Any advice contained therein is provided for the general information of readers and does not have regard to any particular person's investment objectives, financial situation or needs and must not be construed as advice to buy, hold and sell or otherwise deal in any kind of commodities, currencies, securities or other investments. Accordingly, no reader should act on the basis of any information contained therein without first having consulted a suitably qualified financial advisor.

From Cheer to Fear

From Petro Dollars to New Energy Currency

Recently there was an article on the web and in the newspapers saying that a secret pact was sealed way back in 1970s between Saudi Arabia and the US about mutual help that the two countries will extend to each other. According to this pact US will buy oil from Saudi Arabia and supply arms to Saudi Arabia and Saudi Arabia in turn invest the surplus dollars in US treasuries. Here is the link to the story for those who would be interested in understanding the details:

http://www.bloomberg.com/news/features/2016-05-30/the-untold-story-behind-saudi-arabia-s-41-year-u-s-debt-secret

To me a new story emerges from here. Now that the US is self-sufficient in oil and no longer purchases oil from Saudi Arabia, the barter trade cannot continue and there can be no more purchase of US treasuries by the Saudi kingdom. In fact from now onwards the deficit of Saudi Arabia will need to be funded by sale of its reserves in US treasuries or alternate means/ borrowings/ sale of assets, etc.

What impact can Global warming have on the Global economy?

Now that there are talks of the global warming and replacement of fossils based fuels by sources of clean/ solar energy, the investments in these strong potential areas is going to grow manifolds within the foreseeable future.

The above indicates that if an energy product consumed on a mass scale (solar/ tidal energy/ stored energy/ power banks) can be bartered by mass scale products/ services (be it arms and ammunitions/ clean potable water/ wheat/ coffee/ orange juice/ provision of long term consultancy/ services) of a country and also the balance of the underlying currency payments can be reinvested in the treasuries of the country providing the bouquet of products/ services of mass consumption, the dynamics can tilt in favour of the currency of the country exporting these products/ services.

That’s not all that I wish to convey here.

How close are we to this? In which currency’s favour is the tilt going to occur?

While the new order may take decades to establish, its beginning may have already started. Newer pacts will perhaps seal the fate of the pact above mentioned or will perhaps let it not survive. The one and only factor related to the above stated shift in paradigm which keeps unsettling me or rather keeps assuring me or endorsing my viewpoint are the charts of the US Indices. Time has ushered in an era where the US supremacy is going to diminish from now onwards and will lead to a state where the strength and demand for petro dollars will also diminish.

The following post of mine may be read along with this article:

http://commoditycurry.blogspot.in/2015/11/the-final-countdown-indices-special.html

In my above post, dated 21 November, 2015, I have compared the chart of US Indices with the dated chart of Silver. The Dow Jones/ Nasdaq Composite have taken another dip since the above post and also recovered subsequently forming a Triple Top. To my knowledge, a Triple Top is a bearish pattern but I am amazed how the resilience of the US Indices have changed the stance of many a technical analysts who have started believing that if the indices/ markets break certain resistances, the markets are in for a fresh bullish wave.

While I do agree that anything can happen in financial markets, I do not put on blinkers or follow the market/ technical analysts blindly.

The duration of the multi-period employed in my post of November 21, the link for which is given above, has now been extended by me in my current post. Besides the line graphs and the newer duration multi-period adopted for the candlestick charts, I am also presenting a unique proprietary combination of multiple (set of three) stochastics drawing comparison between the charts of Silver and Dow. Need I say anything more on the direction of the markets from here?

The Eccentricity of Extrapolation of the Economists and the Statisticians

During my graduation, one of the professors gave an example which I always cite as a humorous analogy: “If you keep the lower half of a person in a furnace and the upper half in a refrigerator, on an average he should be feeling fine.”

By the same yardstick if we extrapolate the US economy and the Indian economy, the Indian economy will reach moon sooner than the US economy.

The Frustrated Fed

Why is the Fed hell bent on raising the interest rates? If the near zero interest rates have taken the US Indices/ economy to the stratospheric heights, the Fed should continue to maintain the rates. According to extrapolation employed by Fed, the US GDP/ economy should continue to grow at a sustainable rate. Then why should it tinker with the interest rates at this juncture?

Somewhere deep within its heart, the different and diverse forces/ representative members of FOMC feel that all is not well and there is something else brewing up which is not revealed/ apparent to the common man. There are perhaps various imbalances/ bubbles (be it an imbalance or a bubble in the stock market or treasuries market or any other financial market) created by a single steadfast policy decision of near zero interest rates under the guise of single steadfast objective of the target unemployment rate (to hell with anyone/ anything else which comes in/ on the way).

The Success of the Manipulative Market Makers

Dear Fed, the Market Makers have succeeded to make the public believe that the extrapolation of sustained/ projected growth rates will take the US GDP/ economy/ Market Indices to higher levels from here.

Triggers for a correction

Many people ask me as to what would be the triggers for a correction? I tell them that the triggers are always built in the system. It all depends upon when does the media or the policy makers wish to make them public.

While I am not at all trying to make an attempt to hint that the data being reported is wrong or manipulated, all that I am attempting to say is that agencies compiling the data have a first-hand feel of the anomalies about to happen in the near future but these anomalies get guised under the averages or many of the data reported are not perfect lead indicators.

Short-sightedness of a Consultant friend

A consultant friend of mine who claims to be closely working with the government claims that the Indian stock markets are not going to fall further. I can only say that one cannot piss or fart against the wind. If the big daddy sneezes we get the cold.

From Cheer to Fear

Here below are the newer comparative charts along with the proprietary stochastics (technical indicators) that indicate the soon to be direction of the US Indices.

Contact:

Author can be contacted at riskadvisory@outlook.com.

Disclaimer:

These extracts from my trading books are for educational purposes only. Any advice contained therein is provided for the general information of readers and does not have regard to any particular person's investment objectives, financial situation or needs and must not be construed as advice to buy, hold and sell or otherwise deal in any kind of commodities, currencies, securities or other investments. Accordingly, no reader should act on the basis of any information contained therein without first having consulted a suitably qualified financial advisor.

Expect Some Fireworks

Expect some fireworks to occur in the months of June and July in the financial markets incuding commodties.

Donald Trump May Prove To Be Right

Donald Trump May Prove To Be Right

I read in a latest web news Donald Trump saying that the markets are overheated and they are going to crash. For a change there is someone who is blowing the warning trumpet. Till now I used to be amazed how irresponsibly the Fed has put on the blinkers and is marching relentlessly towards the goal of least unemployment (terming it a mandate to justify near zero interest rates) without considering/ ignoring all the signs of an imminent crash, appearing on the expressway of the Wall Street going uphill and eventually going to lead to The Valley of Fear, which may or may not be visible to the economists as of now or perhaps they don’t wish to be the naysayers so as to displease the vested interests despite witnessing and recognising all the signs.

Here is someone who is familiar with the environment and perhaps the ground realities too. Whether he is the right presidential candidature choice or not may be a different matter altogether and for that matter the same may hold good even for the Democrat in the fray for the presidential elections.

Fed should perhaps, at least NOW, remove its blinkers and see for itself that instead of leading the recovery and launching the economy into a healthy orbit, it has in reality played the game of ‘Snakes and Ladders’ wherein towards the end of the game on the topmost row, whatever number the thrown dice may show up, there is a snake in the form of good news or bad news sitting silently coiled so many squares away. Each square is going to lead to a ride or slide – by whatever name the Fed may call it – many miles below.

Instead of deciding on which policy statement to play in the next FOMC meeting, it will be prudent on part of the Fed to decide on the kind of safety net it should be providing for the Americans lest it may end up playing a bigger game of US$ 8 trillion QE starting MIDDLE OF THE YEAR or sooner.

Here are the charts which in my wisdom support Trump and his statement.

Of the two indices shown above, Nasdaq Composite gives a better indication of the things in the offing and looks more scary in comparison to Dow.

Contact:

Author can be contacted at riskadvisory@outlook.com.

Disclaimer:

These extracts from my trading books are for educational purposes only. Any advice contained therein is provided for the general information of readers and does not have regard to any particular person's/ organisation’s investment objectives, financial situation or needs and must not be construed as advice to buy, hold and sell or otherwise deal in any kind of commodities, currencies, securities or other investments. Accordingly, no reader should act on the basis of any information contained therein without first having consulted a suitably qualified financial advisor.

Upto 20% off on USD - Currencies Special - USD, EUR, JPY, GBP, AUD, CHF, INR

Upto 20% off on USD

Sounds bizarre. Is it some kind of scheme going on? Not exactly. All the same, US dollar is going to be off 20% from its peak reached against majority of the currencies in the recent past within next two-six months from now.

This is one scheme which offers a lot of opportunities for punters and organisations alike, but how many of them will be able to avail of the scheme is yet to be tested. Many of them would perhaps be on the other side of the table and may actually suffer losses depending upon how severe will be the speed of fall, because the general tendency of the individuals and organisations – specifically in case of USD – is to remain long in the so perceived safe haven currency/ asset.

Potential impact of a dropping foreign currency

Export oriented organisations see corresponding loss in earnings in domestic currency due to weakening foreign currency, whereas import oriented organisations benefit due to lower cash outflows.

Similarly, organisations having dollar denominated liabilities benefit from the downsized liabilities, when these are translated in local currency on the balance sheet, whereas, there is a corresponding diminution in the value of dollar denominated current and long term assets when translated in the domestic currency, resulting in higher provisions/ depreciation in the books of accounts.

This is simply theory. The real test will be that of the Central Banks as to how effectively they will be able to absorb and cushion the impact of the volatility arising out of a fluctuating and falling foreign currency so as to have least impact on the profitability of the local businesses.

While looking at some of the charts below, it is evident that the fluctuating currencies will have the potential to rock the financial markets and cause a significant impact on the operations and the balance sheets of the organisations having foreign currency exposures. Organisations which will prove to have the resilience and wherewithal to manage and/ or in an unlikely situation absorb the impact of the turbulence arising out of the fluctuating foreign currencies will be able to survive in the long run. Rest may get dwarfed or wiped off.

Turbulence in the currency markets is here to stay for a longer period than most of us are able to think of or imagine.

Here are the charts of some of the prominent international and domestic currency pairs:

USDEUR

USDJPY

USDGBP

USDAUD

USDCHF

USDINR

EURINR

JPYINR

GBPINR

USD has commenced a confirmed bearish phase against Euro and JPY, whereas it is stalled at the resistance levels against GBP and AUD (Australian Dollar) from where it is very much likely to retreat. CHF (Swiss Franc) which has a strong link with Euro is most likely to follow Euro’s strength against USD despite having a stable and lesser volatile parity with USD.

In the Indian context, USD has peaked against rupee, which is evident from a host of adapted Bollinger Band charts, multi-period candlestick charts (please refer to my previous posts on the blog) and other technical indicators. A strong Euro, JPY and GBP against USD will lead to strength against INR as well.

Contact:

Author can be contacted at riskadvisory@outlook.com.

Disclaimer:

These extracts from my trading books are for educational purposes only. Any advice contained therein is provided for the general information of readers and does not have regard to any particular person's investment objectives, financial situation or needs and must not be construed as advice to buy, hold and sell or otherwise deal in any kind of commodities, currencies, securities or other investments. Accordingly, no reader should act on the basis of any information contained therein without first having consulted a suitably qualified financial advisor.