Home > Financial Ponzi, investing, stock chart breakout > India in Breakout mode?

India in Breakout mode?

While the U.S. equity indexes have bounced back towards their recent highs in what I see as a collection of bearish longer term patterns, some emerging markets look like healthier bulls to my eyes.  India has been a less-than-stellar performer in recent years.  It may be breaking out.  It is moving above a multi-year trendline, and may have an inverse head-and-shoulders at its back.  Below is the chart of EPI, an India ETF.

2014-03-17-EPI_CHARTS

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  1. Draft
    March 18, 2014 at 10:56 pm

    I’m curious what you think is the technical interpretation of the U.S. bounce. The markets appear not to have dropped to what you drew as support in their rising wedges, but instead bounced early.

    • March 19, 2014 at 10:34 am

      Draft,

      Thanks for your comment. I don’t have any particular causal explanation for the early bounce that you noted. The bid under the market has been extraordinary. Dips have been growing shorter and shallower. The most recent dip was certainty both of those things.

      I find trend lines to be very useful in identifying areas where there should be support and/or resistance, but they are imprecise by nature. After all, technical analysis is really just an attempt to identify patterns in the investor sentiment using price as a proxy. So, very often price turns before reaching a trend line. Perhaps even more important is the fundamentally subjective nature of trend lines. What I see may be different than what you see in a chart. It is possible that the most accurate read of the long term S&P chart is that early 2012 was a major breakout. At that time, it broke above a 2 year rising wedge and then proceeded to break above the double-top previous highs of 2000 and 2007. In both cases, it backed up and retested those areas before pushing to new highs. So maybe 2012 was the start of a major bull run? I don’t happen to think that is particularly likely because of a slew of other opinions I have about economy and politics. But maybe I’m wrong. And maybe I’m right about that other stuff, but QE alone is capable of driving the market higher for may more years? I suppose we shall see.

      That’s probably a much more meandering answer than you were hoping for, but that’s my extended opinion on how I view charts in general. The S&P (and the others I noted) are still within the range of the patterns I noted. Copper remains broken down, and as I see it, the others remain within the trend lines of their respective patterns.

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