Thursday, June 17, 2010

Brazil and India

The BSE and the BVSP are two indexes worth watching. The pattern since April has been quite similar to the SPX. However, at this stage both the BSE and BVSP could be making a c wave of a a-b-c corrective rally, whereas the SPX may be in the process of forming an "a" wave. The unfolding of wave c in the Indian and Brazilian markets may present a clue as to where the SPX may be headed.
The longer term chart shows that the BVSP is in weaker shape than its Indian counterpart. The recent low was made below the previous lows of Oct 09 and Feb 10. The BSE has not broken below its corresponding lows. If these markets were to negate the corrective view and start to rally significantly higher it would suggest that the period from October 09 to May 10 was a huge sideways correction in a massive bull market. If this were to happen chances are the American markets would follow enthusiastically.

Watch how 'c' resolves itself--or--is it actually a 'iii'?

Where's the Beef?

The rally from May 25th has been lacking a key ingredient if it is going to continue in both time and price. What it is missing is volume. Although the 'stats' are impressive with regard to A-D rations and volume ratios (TRIN etc.), it is missing the punch that heavy volume contributes. Extended bull market moves form its base with substantial volume as well as solid price gains. Corrective rallies tend to lack volume--impressive at face value--but lacking the essential ingredient to sustain a rally. Impressive volume will have to enter the scene soon if the bull is to take command.

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