The GLobal Market Trader Weekly Update – 13th November 2011

Written By: Savio Rodrigues on November 13, 2011 No Comment

Hi friends,

Back after a short break. As has been my earlier view, US and European equity markets continue to be in a bear market rally. The rally will have its share of retracements but slowly and steadily investors are getting back to stocks. Long only funds have also started buying. This is exactly what the bear wants!! Sentiment is still not totally bullish and till that continues to persist markets will move higher and every dip will be bought into. It is only when most investors talk of bullishness will the final downmove happen. So there is still time for the rally to get over. Money making is no doubt difficult as markets have been choppy but one or two big trades can quickly change the equation. The important thing is capital preservation. Next week is expiry week for US derivatives markets and the markets are likely to move higher before we see a meaningful correction which is likely to give an opportunity to retail to invest in the market. Most markets including emerging markets are following the movements of the S&P500 and as such when the S&P500 moves up these markets move up and vice versa. Short term investors can buy the dips but remember that eventually the there is a high probability of the Dow getting back to test the lows of 2008 when the final bear unleashes its wrath. So be nimble and not complacent.

The Dollar index also seems to be having a pending upmove which coincides with the downward correction in stocks before a blow off rally in equities across the globe.

What Are The Markets Saying?

US Markets

Dow Jones Industrial Average

Consider buying on dips around 11950 until expiry for a target of 12400. Markets could retrace after expiry to test support of 11300.

S&P500

Target is 1300 and 1305 is a strong resistance which could be used as a shorting opportunity for a target of 1190.

Currencies

Euro/USD

The pair is headed to 1.3835 in the earlier part of the week. A crossover could retest 1.40 from where it could move down. After expiry of derivatives it is better to be short on the pair as it may quickly move below 1.3100.

GBP/USD

1.6200 looks possible this week where one can go short for a target of 1.5800.

Metals

Gold

Would still be patient to buy around $1500 as a short term bottom still does not seem to be in place.

Indian Market

Nifty

Bad IIP numbers clearly show the economy is slowing down. But the index is likely to rise in line with the S&P500. In the coming week the index is likely to face resistance at 5300 and after Thursday one could consider being short for a week for a target of 5050-5020

One could buy on a decline to 5050-5020 for a target of 5450 and then 5850 by December 2012.

Happy Trading!!

Savio

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