Wednesday, November 21, 2012

Morning Market Analysis

Let's start by looking at the BRICs' long term charts.  I looked at the Brazilian long-term chart yesterday

The Chinese market broke out of its consolidation pattern about a month an a half ago, but has since fallen back to trading within the range.  Prices are now right at the 200 week EMA and the remaining EMAs are trading in a tight pattern around the 200 week EMA.

Both the Indian market (top chart) and Russian marker (bottom chart) are trading in a sideways consolidation pattern at the bottom of multi-year charts.  Both are also below their respective 200 week EMAs.

The charts above (and yesterday's Brazilian chart) show that the previous primary drivers of the world economy are not in a position to do so now.  China is changing the composition of its economy by making it less export dependent.  This is leading in part to the slow down in Brazil.  Russian is heavily dependent on raw material exports and India has a big problem with its government structure.

After spiking in the spring, the grains complex has been slowly moving lower.  Prices are now trading at the 50 week EMA at price levels established in early 2011. 

The daily chart shows this in more detail.  Prices spiked in the early summer as the effect of the US drought started to become apparent.  Prices have been drifting lower and are now trading at the 200 day EMA.  Also note the negative MACD and CMF reading.