The longer term trend for the Dow Jones and S&P 500 still remains positive although there are some divergences and momentum sell signals visible on a weekly basis said Louise Yamada of LY Technical.
With regards to other asset classes like gold and crude, she thinks gold would be in a sideways trading range over the longer term and may not necessarily move much higher. However in the short-term if it can make through USD 1350 per ounce then it could go higher towards USD 1400 per ounce.
Her first target for the West Texas crude is USD 110 per barrel.
Below is the interview of Louise Yamada of LY Technical with Sumaira Abidi & Nigel D'Souza on CNBC-TV18.
Sumaira: The US being the mother market, decides the trend. What are the levels that you are seeing on the Dow Jones as well as the S&P 500 on account of the tensions that are been created in the Russia-Ukraine standoff?
A: We have been looking for the possibility of moving into a sideways behaviour on the part of the US market. It is possible that we come back and even test the lows in February for both the Dow and the S&P. There are some negative divergences and momentum sell signals on a weekly basis in more intermediate timeframe but the longer term is still positive, so any interruption here that we see could be a matter of days to weeks but we do not think it is going to alter the major trend at this point.
Nigel: What about the emerging markets and which emerging markets look particularly?
A: Looking at the Russian market, obviously 10 percent points, so that one probably the worst looking. Mexico has also been failing over the past several weeks and I some vulnerability will continue already having broken under 40,000, so could come back towards 36,000 and Shanghai which just cannot seem to put in place a rally that is higher than each prior rally over five years. So, that market would have to get through 2,200 to look better when 2,000 is a very critical support level.
Sumaira: What about the other asset classes, what about gold or crude. What are the levels you are seeing over there?
A: Gold certainly decided to rally and USD 1,350 per ounce was our first potential that has been met by the 2012 downtrend right here and if it can make it through there, it is possible it could go higher towards USD 1,400 per ounce towards 2013 peak. I would suspect over the extended period of time that gold would also start to move in a sideways trading range, it may come back and test some of the lower levels and just moves sideways rather than necessarily going much higher.
The target for West Texas crude - we have USD 110 per bbl with a possibility that it could go back towards three year upper band of this trading range around USD 114 per bbl but USD 110 per bbl is our first target.
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