Market Musings

September was a month of consolidation after  brutal fall in August. Precious metal and energy corrected significantly so did currencies. I am presenting review of my past calls in this post. 

I have been consistently mentioning my post that Gold was looking weak and the metal saw its worst fall in last 30 years in this month. At one point in time Gold touched a  low of 1532 and thus hit my target of 1550. If we look at the given chart we can see that gold had just completed 23.6% retracement and had closed at 1627 levels.  I think in coming months gold will break below 1500 levels and we can see 1300 on charts which will be 50% retracement for gold. The maximum correction in gold can be expected up to 1100 USD. I think long term investor should start buying gold in the range of 1200 -1400 and invest atleast 25% of their investment portfolio in gold as I think that coming time is going to be very tumultuous for fiat currencies. 

GOLD

Silver had seen even a bigger correction than gold . If we look at long term chart of silver we can see that it took support exactly at the trend line which is at 26. Silver have also completed 50% retracement level at 29.300. I think there will be some more downside to silver and it can fall up to 20 USD an ounce, it it goes below 26 USD an ounce level.  I think Silver just like Gold would be an excellent long term buying opportunity and investor should start accumulating silver between 20- 24 Ounce with a stop loss of 14 ounce. 

Silver

Crude corrected to 80 levels and is consolidating at these levels. Crude is also forming a very bearish pattern and any weekly close below 77 USD will indicate a larger correction towards 55 -60 USD levels.

Crude Nymex

If we look at the long term chart of Euro we can see that Euro is trading in a downward sliding channel. As expected Euro corrected form 1.43 levels to 1.34 levels in September. I think Euro will continue to correct in coming time and it should fall up to 1.15 levels and it can even go to parity with USD as the long term support line rest there.

EURO

Below is the chart of S&P500. We can see that even after a fall of 250 points on S&P retracement have been insignificant. Although S&P did 50% retracement (1231) it consistently sustained between the range of 1130 -1170 during the last seven weeks. Thus it seems that S&P 500 have completed its time retracement but has failed to do any sustained price retracement which itself is a very bearish signal.

Even if we look at the pattern we are forming a head and shoulder pattern and if SPX breaks below 1100 the conservative target for this pattern break out is at 1000 and it is even possible to see 900 on charts. 

SPX 500

As we all know that FMCG are defensive companies and generally protect wealth during bear markets. Here is the chart of Hindustan Unilever, You can see that HUL  made a high of 324 rs in March 2000 and after consolidating between these levels since last 12 years HUL had given a fresh break out. I think HUL is going to move up sharply form current levels. Having said that I also want to point out that HUL like most other FMCG companies are trading at a very high valuation levels but as per charts it is all set to go higher. Therefore it may also be constructed as proof that markets will fall sharply in coming year and this will result into a flight to safety where people will rush to invest in companies like HUL.

Hindustan Unilever