Tech Musings

Yesterday S&P 500 made a low of 1101 and hit the target of 1100 which I mentioned in my post on 16th June. The reason why 1100 was the most probable target is that it was 38.2% retracement of the entire rise form the lows of March 2009 to the highs made in April 2011.  Further we can see that the second target is around 1020 levels which is 50% retracement of the entire up move and coincides with he lows made in June 2010. I think the present fall in markets will halt at 1020 and probably the Government will come out with QE III by then.  Moreover they would have created enough panic by then to make the QE III proposal more palatable to the public. 

Similarly if we look into the internal of this fall form 1345 to 1101, this entire fall have been without retracement. The first retracement level is at 1172 which got hit yesterday. I think looking at the weakness in the market. there is a high probability that the market will do (at maximum) 38.2% retracement of the entire down move and therefore S&P 500 should not move above 1206 levels. But unless and until S&P500 moves above 1260 levels there will be further downside correction which will take the market to 1020 levels. 

Yesterday in my second post on Gold I wrote,  probable target for gold can be at be 1995 (38.2% retracement), the second target will be  2534 (50% retracement) so on and so forth. To prove the point lets see the given chart. Gold broke above the round bottom pattern when it move above 700 USD an ounce. The highest target for this pattern is at around 1900 -2000. But before moving towards this target gold have consistently faced resistance and support at various Fibonacci levels. 

I have created this chart to show how before moving towards the ultimate target of  1900 -2000 USD gold faced support and resistance at various levels. 

Similarly in the same way before moving towards 5000 levels, Gold is bound to face resistance at various Fibonacci levels but if the government keeps on debasing currencies than ultimately gold can scale 5000 USD an ounce. 


Lastly let us look at the INR - USD chart.  INR was made a high of 52 during February 2009 and since then have been moving in the side ways trend.  I have made the trend line and we can see that this week INR have convincingly broken out of the downtrend.  If INR manages to say above 45 levels for three weeks then it will move up towards 48 levels.

INR - USD chart

As per my reading of world equity indices I think the sell off and risk aversion in global equity markets will continue and I wont be surprised to see INR breaching 52 levels and move beyond it.