World Markets: Critical inflexion points round the corner

World markets are at a unique stage right now with many markets at a critical inflexion point. This period has acquired special significance because of the synchronous movement and confluence of short term and medium term cycles not only across geographies but also across asset classes like equities, bonds and commodities. Following are our views on these various inflexion points:
1) Global Equities: Most of the global equity indices are at or near their intermediate term bottoms and hence present excellent BUY opportunities. All the bottoming out are likely to happen between now and 9th July. DOW could bottom out between 10800-11200. S&P500 between 1250- 1275; NASDAQ between 2240-2290; BSE SENSEX between 12400- 12800; NSE NIFTY between 3700-3850; HANGSENG between 21000-22000; SHANGHAI between 2550-2650; NIKKEI 13200- 13500; SINGAPORE 2850-2950; FTSE 5300-5500; DAX 6100-6300; CAC 4200-4400. Many of these global equity indices are going to make their next intermediate peaks between August and September. However, many of them could go onto make higher intermediate peaks between December and January. It would be appropriate to point out that this intermediate uptrend is part of a long term bear market in equities which can easily extend upto the second half of 2009. One could buy these indices with a medium term horizon, albeit, with appropriate stop losses at this stage. However, on a longer term basis, any rally that happens in next few months is an opportunity to SELL and Exit or may be even short these markets.
2) Crude Oil and other Industrial Commodities: We expect crude oil to hit an inflexion zone very soon. We expect crude oil to go through a period of relative underperformance initially followed by absolute underperformance and may be a big fall sometime in September to October 2008. What this means is that Crude could hover between 140-150 $ in next few days and weeks and may be go a little beyond as well, but would consistently underperform its scorching rise of last few months. It could in all likelihood be sideways for next many weeks before it starts its downward climb. What is more evident is that crude by October may be significantly lower than what it is today. Similarly other industrial commodities would essentially remain in a narrow range before starting a convincing downward journey in the next 2-4 months
3) Gilts: We expect US and German 10 year bond yields to be in sideways territory for next few months. US 10 year Treasuries would remain locked between 3.80 to 4.25% while German bunds could remain between 4.40 to 4.75%. Yields could go down sharply in September to October period and then continue with the downward bias right upto October 2009.
We recommend an across the board BUY on all non-commodity driven Equity indices of the world with a horizon of 3-6 months. One could start buying immediately and exhaust 50% of the buying in next 2-3 days. If the bottom of various ranges is reached (within 2-3 %) one can be 100% invested. Stop loss levels would vary from one index to another but broadly be 10% below the bottom of the buying range