About

Rajveer Rawlin received his MBA in finance from the Cardiff Metropolitan University, Wales, UK. He is an avid market watcher having followed capital markets in the US and India since 1993. His research interests includes areas of Capital Markets, Banking, Investment Analysis and Portfolio Management and has over 20 years of experience in the above areas covering the US and Indian Markets. He has several publications in the above areas. The views expressed here are his own and should not be construed as advice to buy or sell securities.

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Sunday, 28 June 2015

Stock Market Signals for the US and Indian Stock Market for the Week beginning June 29


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Indicator
Weekly Level / Change / Significance
Implication for
S & P 500
Implication for Nifty*
S & P 500
2101,- 0.40%
Neutral
Neutral
Nifty
8381, 1.9%
Neutral**
Bullish
China Shanghai Index
4193, -6.37%
Bearish
Bearish
Gold
1174, -2.18%
Bearish
Bearish
WTIC Crude
59.65, -0.07%
Neutral
Neutral
Copper
2.64, 2.62%
Bullish
Bullish
Baltic Dry Index
823, 5.65%
Bullish
Bullish
Euro
1.1168, -1.74%
Bearish
Bearish
Dollar/Yen
123.87, 0.94%
Bullish
Bullish
Dow Transports
8242,- 2.01%
Bearish
Bearish
US 10 year Bond Yield
2.48%, 9.22%
Bearish
Bearish
Nyse Summation Index
-208, -4.43%
Bearish
Neutral
US Vix
14.02, 0.43%
Neutral
Neutral
20 DMA, S and P 500
2103, Below
Bearish
Neutral
50 DMA, S and P 500
2107, Below
Bearish
Neutral
200 DMA, S and P 500
2053, Above
Bullish
Neutral
20 DMA, Nifty
8181, Above
Neutral
Bullish
50 DMA, Nifty
8262, Above
Neutral
Bullish
200 DMA, Nifty
8364, Above
Neutral
Bullish
India Vix
15.76, 4.47%
Neutral
Bearish
Dollar/Rupee
63.45, -0.03%
Neutral
Neutral




Overall
 S & P 500
Nifty

Bullish Indications
4
7

Bearish Indications
8
6

Outlook
Bearish
Marginally Bullish

Observation
The Sand P 500 was nominally down last week while the Nifty outperformed significantly. The Vix, transports and summation index are flashing warning signs. Market cycles are favorable till July but indicators are turning bearish so a pull back is likely next week.


On the Horizon
Greece discussions, US, UK and Canada PMI data,  US payroll data






*Nifty
India’s Benchmark Stock Index


Raw Data
Courtesy Google finance, Stock charts


**Neutral
Changes less than 0.5% are considered neutral


Signals are bearish for the upcoming week. You can check out last weeks report for a comparison.

Friday, 26 June 2015

Early Signs of a Deflationary Collapse?

Some interesting developments are playing out in long term charts that make me feel comprehensively bearish over the long term:

a) Firstly a massive rising wedge  has formed on the long term S and P 500 chart. This is much bigger than that observed in 2000 or 2008 and has started to break to the downside which could have profound consequences. A major bear market could ensue post the break. Chart courtesy StockTwits.com:

b) Secondly Margin Debt is at record levels and has eclipsed levels seen during the maniacal peaks of 2000 and 2008. Once the above rising wedge breaks you could have a rush for the exit triggered by margin calls. Chart courtesy advisorperspectives.com:
stock market today

c) Thirdly despite multiple dosages of Quantitative easing (#QE) from global central banks the velocity of money is below the levels observed during the Great Depression. This implies that changes in money supply will have little impact on the economy going forward. Further QE's are likely but won't really stimulate the global economy. Chart source armstrongeconomics.com.
velocity 1910-2010
The above developments taken together with ongoing bear markets in several key asset classes  make for a deflationary collapse increasingly likely in the not too distant future.

Tuesday, 23 June 2015

The Very Scary Rising Wedge on the US Stock Market S and P 500 Index

This is a chart originally highlighted on Stocktwits.com, the rising wedge on the S and P 500 with eerie parallels to 2000 and 2008. What is worth noting here is the current rising wedge is much bigger than that observed in 2000 or 2008. The consequences could be severe as and when the break occurs and could trigger a major bear market:

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Saturday, 20 June 2015

Stock Market Signals for the US and Indian Stock Markets for the Upcoming Week beginning June 22

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Indicator
Weekly Level / Change / Significance
Implication for
S & P 500
Implication for Nifty*
S & P 500
2110, 0.76%
Bullish
Bullish
Nifty
8225, 3.03%
Neutral**
Bullish
China Shanghai Index
4478, -13.32%
Bearish
Bearish
Gold
1200, 1.63%
Bullish
Bullish
WTIC Crude
59.69, -0.42%
Neutral
Neutral
Copper
2.57, -3.83%
Bearish
Bearish
Baltic Dry Index
779, 21.34%
Bullish
Bullish
Euro
1.1365, 0.94%
Bullish
Bullish
Dollar/Yen
122.70, -0.95%
Bearish
Bearish
Dow Transports
8412,- 0.06%
Neutral
Neutral
US 10 year Bond Yield
2.27%, -4.95%
Bullish
Bullish
Nyse Summation Index
-199, -33%
Bearish
Neutral
US Vix
13.96, 1.31%
Bearish
Bearish
20 DMA, S and P 500
2104, Above
Bullish
Neutral
50 DMA, S and P 500
2106, Above
Bullish
Neutral
200 DMA, S and P 500
2050, Above
Bullish
Neutral
20 DMA, Nifty
8177, Above
Neutral
Bullish
50 DMA, Nifty
8302, Below
Neutral
Bearish
200 DMA, Nifty
8352, Below
Neutral
Bearish
India Vix
15.09, -13.69%
Neutral
Bullish
Dollar/Rupee
63.47, -0.98%
Neutral
Bullish




Overall
 S & P 500
Nifty

Bullish Indications
8
9

Bearish Indications
5
6

Outlook
Bullish
Bullish

Observation
The Sand P 500 rallied as expected last week while the Nifty outperformed significantly. The Vix is flashing warning signs. Market cycles are positive till July so a rally is likely next week.


On the Horizon
Greece negotiations, US, French and Italy Quarterly GDP, Japan CPI






*Nifty
India’s Benchmark Stock Index


Raw Data
Courtesy Google finance, Stock charts


**Neutral
Changes less than 0.5% are considered neutral


Signals are bullish for the upcoming week. You can check out last weeks report for a comparison.

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My Asset Allocation Strategy (Indian Market)

Cash - 40%
Bonds - 20%
Fixed deposit - 20%
Gold - 5%
Stocks - 10% ( Majority of this in dividend funds)
Other Asset Classes - 5%

My belief is that stocks are relatively overvalued compared to bonds and attractive buying opportunities can come along after 1-2 years. In a deflationary scenario no asset class does well other than U.S bonds, the U.S dollar and the Japanese yen, so better to be safe than sorry with high quality government bonds and fixed deposits. Cash is the king always. Of course this varies with the person's age.