Dow Jones US Basic Materials Index is showing 5 swings up from 2009 low which is a bullish sequence. In the near-term another high can’t be ruled out but it should soon pull back to correct the cycle from Jan 2016 low and then as far as pivot at Jan 2016 low and rising trend line connecting 2009 and 2016 lows stays intact, Index is expected to resume the rally towards 412 – 483 area. In case the pivot at Jan 2016 low gives up during the pull back, then it would do a double correction from 2014 peak and would make another low below 235 before turning higher again. Even in this less aggressive scenario, we expect it to remain bullish against 2009 low as it’s showing 5 swings from there.
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