The Nifty ended the week quite badly. And the culprit is Crude Oil.
The World markets fell more than 2-3% yesterday evening on the back of the rise in Crude. Infact , as I was watching the commodities market yesterday evening, Crude , bullion and metals were having an extremely bullish day. The party was being led by Crude and even as I write this , Crude is shooting beyond $141.25.
Stock market sentiment, which is weak even otherwise, is being further battered by the rising crude oil.
The above Chart of Crude Oil on MCX suggests that it is coming out of a trading range of about 5% and thus the minimum target on break out of this range should be about Rs 6300 (on MCX) and $147-148 in dollar terms.
Crucial support line is at Rs 5600 ( or $131) and till that is broken , Crude is bullish!
I presumed, since last December, that money seems to be shifting from world equity markets to commodities markets.
So the next time you want to know where stock markets are headed, look at commodity markets!
Happy observing!
CA Rajiv D Khatlawala
2 comments:
Hello Mr. Rajiv,
I am Thankful to you for writing the book "How to profit from technical analysis" spreading the knowledge and expertise that you have.
I have learned a lot from your book.
Also I would like to know if you are writing some-thing on co-relation of technical and fundamental analysis (with respect to stock-market)?
Sir,
Although it is real that there is shortage of crude oil in world, but the rising prices must be having some speculative part in it.
How we can co-relate fundamentally to know fair value?
Dear Ashish
There is an age old conflict as to whether fundamental analysis is better or technical analysis. My own presumption is that there should NOT even be a conflict in the first place!!
Both are complementary , though most of the times, prices 'tend' to tell you something in advance. This is because when we look at price charts we are actually trying to 'see' what the big players are doing and then follow them.
Those following fundamental analysis, hence are left behind as they would actually view things much later ....
Crude is good example - if you notice, beyond $100-105 , it is more speculative than fundamental driven.. (again this i my reading, but i am not an expert in crude oil!)
Hence it is always better to have a 'Techno-Fundamental' view !!
Have a great day!
CA Rajiv
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