Charts Tell Another Tale

I find it quite fascinating to watch a number of these business channels in India. Nearly all of them are claiming that this is a good time to buy equities. So I thought that the easy answer would come from a look at the charts. Almost all the important Indices that I looked at are indicating a long-term downtrend. The interesting chart was the Shanghai Composite Index chart which is showing signs of a short-term upmove. But, dont jump the gun as yet. There are a lot of important economic news releases due to be released on 9th and 10th (tomorrow and the day-after). 

So there could be some profitable moves there. But if the index were to break the lows of the last one month then expect a major fall.The interesting part of the charts is that they are precariously balancing on the 500 day Exponential Moving Averages and they have broken the major trend lines. So watch for violent moves. The only thing that is certain in these uncertain times, is an exponential rise in volatility, which is a classic bear market symptom.

The Chart below of the CRB Commodity Index (Kagi Chart) is quite scary. It looks like the uptrend in the commodities is over. The index has already fallen below the 200 day exponential moving average and is about to fall below the 500 day exponential moving average (which stands at 440)

Dow Jones Transportation Average
This is yet another interesting chart, because I have been reading of a bit about the rise in trucking charges, which in some case is estimated at about 20% rise in the past few months. One has to keep in mind that such a rise is not because we have a major revival in economic activity but because a number of companies in the sector are closing down, not a very optimistic scenario for the long-term health of the economy. The chart below is once again quite bearish.

Shanghai Composite (Short-term)
This is very interesting. there is some positive divergence that may provide some interesting short-term speculative opportunities.

At the same time be very careful, there are not only a lot of news releases slated that could change the game. I am quite sure that they would indicate an economy that is rapidly slipping out of control because of overheating. Moreover there is a major trendline. If it breaks the trend line, then expect a major crash in that market and with that the commodity market.

Tailpiece:

The Journal of Commerce Smoothed Index is already indicating a recession in the USA so conserve cash.