Asset Markets Close to Peaking

We are currently finishing the structure from the low of 31 January, NOT (I believe), from the fourth wave low of 30 January.

 

We therefore need a fourth wave (about to unfold today/tomorrow) and then a final push higher (Monday?). I expect that a lot of indices will not make a new high on Monday… but Apple-powered Nasdaq100 should.

 

It is quite possible that I “lost” a wave, which would mean that we drop and do not make a new high. I think given the longer-term structures, any weakness should be respected.

 

SPY count:

 

QQQQ count:

Risk Assets Likely Peaked

As expected, global equities rallied slightly to complete structures from January 2012 lows as well as, possibly, November 2011 lows. The stage is set for rapid, substantial declines.

 

European Banks, shown here on a four hourly chart, have been one of the weakest sectors globally. I expect declines of about 25%, for the sector, in the coming weeks.

 

NASDAQ100, show here on a four hourly chart completed a longer-term bullish structure in December 2011. Potentially, it could provide a base for much higher levels, however in the medium-term, I expect the rally from December 2011 to correct as much as 8-12%. It is possible that the market will fall much further, but we will have to wait and see the nature of the upcoming decline.

 

Quite an epic structure is finishing in Emerging Equity Markets (shown here on a four hourly chart of EEM – Emerging Markets ETF). As suggested in an update at the end of 2011, early 2012 saw an impressive rally. While there is certainly scope for further upside (about 4-5%), the structure is very heavy. I suggest extreme caution for longs, and will look to establish shorts.

 

Finally for today, Russia (here on a four hourly chart) presents an even clearer bearish case.

 

 

 

Aidyn Kussainov

London, UK.

+44 (0) 7917 274 989

 

Risk Assets Peaking

Risk assets (equities, commodity FX, commodities) are nearing their peaks. I expect leading equity indices to peak around current levels, +/- 2%. In fact, I expect the risk rally to extend for a few more sessions – therefore, +2% from current levels (before topping) is highly likely.

 

This is an hourly chart of the NASDAQ100, which is currently in its final consolidation phase, before an expected exhaustive rally to around 2520.

 

This is an hourly chart of the European Banking index, which is up 30% from its 2012 lows. I believe that it will peak about 5% or so above current levels. We could get to the top directly from here, or could just as easily drop about 6% and then rally to the topping level (EUR120).

 

 

 

Aidyn Kussainov

London, UK.

+44 (0) 7917 274 989

 

A [Risk] Bearish Alternative

I am currently leaning towards a risk-bearish view - that is likely to play out over the next few weeks.

As yet, there are no bearish signals, however the way risk markets are rallying suggests increasing caution.

This is a four-hourly chart of the German DAX, which might be completing a medium-term corrective wave.

The view is similar for the EuroSTOXX 50 - the highs since the November low have been made against sharply diverging momentum indicators.

Markets About To Turn

As expected, risk based and rallied (the next day after the last update). It is my belief that risk will rally quite a bit further, possibly into February.

Below is a four hourly chart of USD against the Swiss Franc (CHF). It appears that the structure is very heavy up here, and is setting up for substantial, multi-week weakness.

Weakness in the USD is likely to coincide with a rally in risk and related assets. Below is a chart of the EuroSTOXX 50, which I believe is about to break out of its 12 week consolidation. It is of course possible that we break to the downside, however I find that difficult to reconcile with a weak US dollar. Therefore, I expect the market to break higher.

It appears that AUD has been consolidation most of 2011. I expect quite a sharp spike higher, followed by an abrupt reversal lower in the next 10 weeks.

Risk Basing

As expected, European indices fell 7-8% from where they were at the time of the last update. It appears that we are now set to base around current levels and rally towards early next year. This will set-up a top for the rest of 2012. Penetration of 25 November 2011 lows across the indices would negate the medium-term bullish view and set-up a re-test of September lows.

The rally to post-October highs in equities will likely coincide with significant weakness in USD. Below, on a four-hourly chart of USD/CHF, I expect a test of 0.83 or so, in the next 8-10 weeks.

European Equity Markets Most Likely Peaked or Very Close to Peaking

European (and Global) risk assets rallied as expected (although in a much more direct fashion), rising 14-17% in 7 trading sessions. I believe this sets the stage for a tradeable top for a good 7-8% correction into Christmas. I consider this to be a very high probability outcome.

This is a four hourly chart of the EuroSTOXX50, tracing out my projection. What happens after the correction lower is very interesting. My projection now is that we rally strongly in January and all the way into February.

This is a four hourly chart of Palladium, which I believe is about to fall hard. This will likely coincide with USD strength and Risk weakness for the next few trading sessions.