Indian Index and US index

On 31^st March 2019, I wrote, “If we look at the given chart of the index, we can see that resistance exists at 12500 levels. The index may break the resistance in case of extremely favourable election results. The long term target for nifty stays at 15000 to 18000”

Since then Indian elections came and went and the results were better than expected, yet Nifty failed to break the resistance of 12500. Nifty made a top at 12430 and corrected 10% in last two months. If we look at the given chart of Nifty we can see that the index have support between 10K to 10700.  At this point in time, I believe that the support should work and Nifty should find its feet at these supports. In case things worsen and everything goes downhill the ultimate support for Nifty exist at 8500 levels.

On 6^th January 2020, I wrote, “I have been observing this channel since the channel break out happened in December 2013. S&P has reached the channel target of 3300. There are two scenarios which can pan out from here. The most likely course for S&P should be a time and at price correction from these levels.  But I think that won’t happen. I think S&P will have a throw over of the main channel and the index may move up to 3600 to even 4000 levels. This move should pan out at a lightning speed. The long term top in S&P should form at those levels after which a serious correction looks imminent.”

I have presented two scenarios in that post.

1)      Time and price correction may start at 3300 levels

2)      Time and price correction may start after a throw over of the main channel where the index moves up rapidly and then starts time and price correction.

The strength of the underlying trend was so high that I believed that S&P will have a throw over. But this has been disproved by the subsequent move in S&P. In the last one week, the index has lost 10%. If we look at the given chart the uptrend in S&P500 which started in June 2009 and lasted for 11 years is now under threat.

If S&P closes below 3000 levels for two consecutive months (I presume this will happen) the target on the downside will be steep. S&P has support at 2700, 2400 and 2100 levels. In the worst-case circumstances, S&P may fall to 1800 levels. This should be absolute long term bottom if at all it happens.  

Precious metals

In my previous post on Gold, I wrote, “If we look at the chart we can see that gold has been making multiple inverse head and shoulder formation for the last 5 years and the neckline lies at 1350-1380. It had attempted to break above this level for 8 times and failed. Today once again gold is trading above 1380 and if it sustains above 1400, the target for gold most likely will be 1800 and maybe 2400 in the next five years.”

Since then Gold has moved up 20% in last 8 months and yesterday made a high of 1650 USD. The current move in gold should continue till 1800 USD. I believe gold will consolidate at 1800 level before further breaking out for higher targets. I continue to maintain the target of 2400 – 2500 USD in next five years.

In the same post I wrote, “Similarly, silver is also looking poised for a breakout and may move up to 20 USD and above.”

Since then silver also moved up 20% and made a high of 18.60 yesterday. Although the intensity of the move looks very low compared to gold. I believe that silver is on the verge of breakout and the target for silver will be 27 USD and further 35 USD in next 5 years. 

Summary:-

1) Expect gold to move to 1800 USD.
2) Expect some resistance in Gold price at 1800 USD
3) Ultimate target for Gold retained at 2400 USD
5) Silver is on the verge of breaking out and should move to 27 and 35 USD over next five years.

Crude OIl

In my previous post on crude oil, I wrote, “If we look at the given chart of WTI crude, we can see that it has strong support at 60 USD. Most likely we will see a 6% to 10% bounce from the current levels and it may move up to 65$, but I expect that to be short-lived. I think the price will again fall from there to 55$ where it will test the long-term channel support. This can happen before the end of December 2018”

The downward momentum in crude oil was stronger than my expectation and crude oil continue to fall to 42 USD. Since then crude bounced back to 65 USD and has largely remained in a range between 55 to 65 USD.

If we look at the weekly chart of NY Crude we can see that the crude is largely trading in a range of 50 -64 and Brent is largely trading in the range of 52-66 USD.

Unless crude oil break above or below this channel crude will stay in this trading range.  

In my previous post written on 11^th January 2015, I wrote, “Long term average prices of crude oil should stay between 50 to 80 USD.” I will narrow this range down to 50 to 70 dollar and my long term bias is on the downside. 

Indian stocks

I generally avoid giving stock-specific calls in my blog as stock suffers from more idiosyncratic risk compared to the index. But at times the chart looks so compelling that I can’t resist writing about them. The last stock-specific call I gave was on reliance industry on 22^nd February 2017  when it was trading at 600 levels with a target of 800 and 1150.

I followed up on this call on 25th January 2018, reiterating my target of 1150 on reliance industries. Ultimately reliance industry moved up by 200% in the last three years and recently made a high of 1600 rupees exceeding my initial targets. 

I came across a similar stock which looks equally compelling. If we look at the given chart of Bharti Airtel. The stock is breaking out of 13 years long consolidation pattern and the target for Bharti airtel will be as high as 900 to 1100 rupees.