S&P Technical Analysis

The US Indices of S&P and Dow touched the trendline of the highs forming what looks like a ending diagonal pattern. Prechter says that you should remain open to a top in the US markets even if they can push higher if they do. Steve maintains that this triangle is a wave 4 triangle and one more new high can occur. But in both cases we will start with a dip to the lower trendline to 2366. So given the risk that 2366 may or may not hold you should keep in mind the idea that an ending may already be complete and top in place yesterday night for US markets

 

 

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Views expressed in this article are purely of the author – Mr Rohit Srivastava – a leading technical analyst. Visit www.adamsmith.tv for services offered by Adam Smith Associates Pvt Ltd

Realty Index triple top

The Realty stocks index just topped near the trendline of the highs from 2012. What this means is that the entire 2012-2017 pattern is probably a long term triangle and wave B of a larger decline. This rally completed wave e of B within the triangle and from the recent high of 2129 we should head to 609 in wave C down based on C=A. That is a 70% decline for the realty index on this simple equation. So people dreaming about the turnaround in the realty stocks into a bull market need to think what they are smoking unless they are confident that the recent highs can be taken out fundamentally.

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Views expressed in this article are purely of the author – Mr Rohit Srivastava – a leading technical analyst. Visit www.adamsmith.tv for services offered by Adam Smith Associates Pvt Ltd

PSU Bank Index

The PSU Bank index is at the upper end of its range since 2010. Draw a trendline from the highs and we just about kissed it. My sensex is that wave Z down started as shown. This is the last and final wave down for any corrective phase. And while it does not have to be large and can end at the neckline my sense is that it will extend as shown and end with an ending pattern. The entire recapitalisation of a sector is not possible without major write downs and declines in book values and rise in the equity base. This is just logic that anyone should get. What are you thinking? In any case we look at the sectors investment potential only after wave Z down is complete. Right now the upside is hardly any in my understanding of the trendline resistance.

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Views expressed in this article are purely of the author – Mr Rohit Srivastava – a leading technical analyst. Visit www.adamsmith.tv for services offered by Adam Smith Associates Pvt Ltd

 

Midcaps & Nifty

It is rare that any big decline in the broad market does not include a decline in the key indices so here is a look at what has happened in this space.

The RS of the Midcaps fell a point below the lower end [green indicator] of the wedge like pattern in the indicator.Staying below the line should mean that the trend in Midcaps has reversed.

The wave count of the BSE Midcap index shows all the moves up and down from 2015 onward as 3-3-3-3-3 so this is a ending pattern and not a trend which would have been 5-3-5-3-5.

Tomorrow I will look at the updates data after expiration and see if there is any new evidence there. But till then today’s bump up in Nifty is a reminder of 2013 Jan when the Nifty made one more new high at the end of the month even as Midcaps were down 8%. So here instead of a ending pattern as shown by me for the BSE 500, the Nifty maybe forming an expanding triangle at the top. This allows the Nifty to go to closer to 9600 before topping out and joining the Midcaps. This is not certain or necessary but an open possibility and may happen on just 1-3 stocks with high weight.

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Views expressed in this article are purely of the author – Mr Rohit Srivastava – a leading technical analyst. Visit www.adamsmith.tv for services offered by Adam Smith Associates Pvt Ltd

Commodities technical analysis Adam Smith Associates

Crude

Crude completed a 5 wave rise and is mostly wave a of an advance. Wave b can see it dip to either 48 or 47 near the wave iv low or 61.8% of the entire rise before wave c up unfolds.

BSE Metal Index

The Metals index has completed a near 61.8% retracement and the recent up move was 5 waves and retraced to a higher bottom. So the rally from today may as well be wave 3 up for the Metals index. The next wave of rally for the sector may have started. Initial level to expect is 13700 on the index. All Value wave Investments in this sector should follow.

 

Lead MCX

Lead prices made a double bottom and started to recover [at 132]. The daily momentum crossed over to the buy side so we should consider that an up trend has started here. 140 and 152 are the resistance levels from the two trendlines on the chart.

 

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Views expressed in this article are purely of the author – Mr Rohit Srivastava – a leading technical analyst. Visit www.adamsmith.tv for services offered by Adam Smith Associates Pvt Ltd

 

Currency technical analysis Adam Smith Associates

Euro

The Euro spent months forming a triangle. And I called it a leading diagonal. But the dip in May was not large enough. A leading diagonal is a wave 1 pattern. Wave 2 is a correction that should retrace wave 1. That did not happen.

So it is possible to mark the Euro as a triangle as shown and the trend up starts as an impulse only from the April low. This is a viable option and we will leave it open. The implications for the trend are nothing. It will only come into important when we try to mark an end to the Euro bull market 5-7 years from today. Right now we are trying to count 5 waves up from the April low and are only in wave 3. So no meaning top is around the corner. Short term reactions however cannot be ruled out whenever we get short term overbought. That is all.

 

USDCAD

I am having to flip flop on some of the currency pairs because the weak dollar trend is a Macro trend. So with the USDCAD failing to go above the 61.8% mark in blue we should consider that wave C down can start. It can fall to 1.31 and if that breaks we are looking at 1.30 and then C=A at 1.17 The big picture may appear like a head and shoulders top with the neckline near 1.30

 

USDINR

USDINR completed a long term A-B-C decline recently and has started to rise impulsively. So far only minor wave i and ii are complete iii up started today and points to 65.50. The support is at 64.30 at the 20dma

 

One more dip in the dollar index to maybe 96.40 would complete wave III and a short term bottom for wave IV up may develop. Sentiment in the dollar is now at 5% bullish only which is a super extreme. A little cooling off for a few weeks in wave IV should create the space for wave V down.

 

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Views expressed in this article are purely of the author – Mr Rohit Srivastava – a leading technical analyst. Visit www.adamsmith.tv for services offered by Adam Smith Associates Pvt Ltd

US VIX – Volatility Index

Does low Volatility matter? Two weeks India VIX reported a very low reading and we did get a broad market correction. But does the lowest reading in history mark a major top in markets. On  twitter there was an exchange that IV rises before a top. Yes this has happened many times and could almost be true as gospel. So let us look at the chart below of the US VIX It made a bottom 1993 and rose from there for years. The final top for the markets was in 2000, 7 years later. It bottomed again in 2006 and the final top for the market was 10 months later in 2007 [S&P). Now the trendline of those two lows was kissed this month. Maybe we have a new low or bottom in VIX and volatility only rises from here. 7 years and then 10 months are hardly any time correlations that we can draw as to how long after a bottom in VIX can we get a top in equities. It is true that short term rallies in VIX are associated with short term correction in equities. What is not clear is the long term relationship. All that we should think now is that this is an unusually low reading for the US VIX and a US stock market correction is the least you can expect. What it might mean for the longer term would require a long term analysis of the US equity indices themselves.

 

 

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Views expressed in this article are purely of the author – Mr Rohit Srivastava – a leading technical analyst. Visit www.adamsmith.tv for services offered by Adam Smith Associates Pvt Ltd

TRADE & COMMODITY FINANCE NEWS UPDATE AROUND THE WORLD

China’s yuan slips to 7th place in global trade finance
China’s yuan slipped to the seventh-most actively traded currency in the league tables for global trade finance, transaction service provider SWIFT said.  A struggling overseas offshore market in the renminbi has hurt the usage of the Chinese currency in global trade in recent months and the latest ranking is yet another indicator of the bearish sentiment surrounding the currency by global companies.
Source: Economic Times: http://economictimes.indiatimes.com/markets/forex/chinas-yuan-slips-to-7th-place-in-global-trade-finance/articleshow/58834678.cms

UN to review “chronic” trade finance gap
The United Nations (UN) has committed to review the trade financing gap and its underlying causes as part of its annual assessment of progress in mobilising finance to support sustainable development. According to the ICC, the “chronic” shortfall has come about largely on the back of the unintended effects of global financial crime regulation.
Source: Global Trade Review: http://www.gtreview.com/news/global/icc-calls-for-un-action/

ICC welcomes enhanced focus on trade finance in UN Financing for Development review
The International Chamber of Commerce (ICC) has welcomed official recognition of the estimated US$1.6 trillion trade financing gap in the United Nations’ (UN) annual Financing for Development (FfD) review.
Source: International Chambers Of Commerce: https://iccwbo.org/media-wall/news-speeches/icc-welcomes-enhanced-focus-trade-finance-un-financing-development-review/

ADB Adds 2 More Vietnamese Banks to Trade Finance Program
The Asian Development Bank’s (ADB) Trade Finance Program (TFP) and two Vietnamese banks — An Binh Joint-Stock Bank (ABBANK) and Tien Phong Commercial Joint-Stock Bank (TPBank) — today signed agreements enabling the program to provide guarantees of up to $50 million annually to support trade finance in Viet Nam.
Source: The Financial: http://www.finchannel.com/business/65144-adb-adds-2-more-vietnamese-banks-to-trade-finance-program

Bangladesh seals trade finance loans
Two banks in Bangladesh have borrowed money from international development banks in order to provide trade finance locally. In separate transactions, the Asian Development Bank (ADB) and International Finance Corporation (IFC) extended loans to commercial banks in the promising South Asian economy, for the purpose of on-lending to their local clients.
Source: http://www.gtreview.com/: http://www.gtreview.com/news/asia/bangladesh-seals-trade-finance-loans/

Goldman Sachs mulls shift into trade finance
In the post-crisis world, Goldman Sachs is not seeing the growth it wants from the businesses for which it is best known – investment banking, trading and managing money for the wealthy – so it is considering expanding into new areas, including trade finance, The Wall Street Journal reports.
Source: https://www.fnlondon.com: https://www.fnlondon.com/articles/goldman-mulls-shift-into-trade-finance-20170502

Steel maker ArcelorMittal SA closes R4.5bn loan facility
ArcelorMittal SA has closed a revolving R4.5bn structured commodity-trade finance facility over 36 months to finance working capital, as part of its balance sheet restructuring.
Source: https://www.businesslive.co.za: https://www.businesslive.co.za/bd/companies/industrials/2017-05-25-steel-maker-arcelormittal-sa-closes-r45bn-loan-facility/

Note: Adam Smith Associates Pvt Ltd is a leading Trade & Commodity Finance service provider in India with presence in Asia, Middle East & West Africa. The above content is purely for information and has been sourced from different online portal for information purpose only.

Dollar Index & US 30 Years Treasury

DOLLAR INDEX
The Dollar index broke the recent swing low and started to extend down in wave iii of 3 of 3, to 97.1 next. This means that a major fall in the dollar has started. This should cancel out most of the bullish dollar wave counts that were still open.

The US bonds retraced 61.8% and started to rise again, Wave C up for bonds should mark another risk off for US equities.

 

 

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Views expressed in this article are purely of the author – Mr Rohit Srivastava – a leading technical analyst. Visit www.adamsmith.tv for services offered by Adam Smith Associates Pvt Ltd

Commodity Technical Analysis By Adam Smith Associates

Silver
Silver as published in the morning completed wave 2 of 3 down. Wave 3 of 3 could go above 18 dollars but may extend to as far as 20.50$ at 1.618 times wave 1. The volume divergence at the wave 2 low is a classic text book observation seen at market lows. When two subsequent bottoms in price, either lower or higher bottoms, not confirmed by volumes making a new high in selling or, as in this case, bigger selling but no new low in price.

 

LEAD MCX
Lead Mcx – unlike copper has not bounced back sharply but appears to be making a double bottom near 132. Wave wise the most recent decline appears complete as a-b-c from the 1st May high. The RSI shows a positive divergence from the April bottom. Daily momentum indicators have still to confirm and the 20dma at 139.8 is the first resistance to cross. A double bottom would have the potential to move up to 153 on a conservative basis considering that we are still consolidating longer term. Else if a larger degree rally started then we should breakout above 153. This needs to be watched on how the rise develops. For now the odds favour the bulls.

 

Aluminium MCX
My original interpretation that Aluminium is a running triangle in wave 4 is what has turned out to be true. Wave e of the triangle broke the neckline for a few days but it turned out to be a false break and followed by a rally. This usually means a new high above the 130 high seen in wave 3. And wave 5=1 points to as far as 137. Support is near the averages at 123.

GOLD
Gold short term paused in wave ii and may have resumed wave iii up yesterday. The 20dma at 1244 is the short term support and iii=i points to 1300 next on the way up

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Views expressed in this article are purely of the author – Mr Rohit Srivastava – a leading technical analyst. Visit www.adamsmith.tv for services offered by Adam Smith Associates Pvt Ltd