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Inter Market Analysis

Inter market analysis is a series of articles studying related segments of the market to identify lead lags between trends in each segment. This can often forewarn you of impending changes in trend and allow for planning of required action based on it. For example midcaps v/s large caps, currencies v/s commodities and US markets v/s European markets and so on. In a global environment inter-market relationships are not restricted to a country but between countries and their respective asset classes as well.

CNX IT

The CNX IT [7137] index remains the best performer in a bad market. Staying above 40dema [7014] and weekly momentum still positive it could start a rally toward its wave C of E target zone near 8500-8800 with near term target near 8000.

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CNX Bank

Few days back I wrote about the CNX bank [11163] index completing a complex triple zig-zag to be marked W. And I think it may have done so today at the low and is still set up for a counter trend move from the low today at 11048 to 12000 to kiss the rising trendline it broke earlier and make a 50% retracement in wave X.

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BSE Small Cap

The BSE Small Cap index has been showing a disturbing trend again.The recent rally did not go past the 20dma and I tried anticipating a move up in the NSE Midcap index two days ago which failed. What is bothering me is I am not sure that these indices completed a 5 wave decline at the recent bottom where the Nifty has bounced back from. The bounce back ended near wave iv of lower degree normal for wave 4. But we cant be sure till there is more evidence.

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The evidence on yesterdays hourly chart is that the sell off from the recent high appears like a 5 wave decline marked i-ii, and yesterday the fall started extending below the low or i meaning that wave 5 down might be extending. If so the situation is similar to that in Jan when the broader indices collapsed far ahead of the Nifty. While the Nifty is holding up to the RBI, the broad market might have already started another extended decline.

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