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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The Case for a Global Recession in 2017 and Beyond – The Obvious Evidence

[ View the story "Recession Upcoming?" on Storify ]

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Tuesday, 28 June 2016

Chart of the Day - Market Cycles and Sectors

A close look at sectors can tell us where we are in the economic cycle. The chart below from Chris Vermeulen via LinkedIn shows that the dominant sectors currently are utilities and precious metals which occur typically at the very end of business cycles as we enter a major bearish phase:
sectors and cycles

Sunday, 26 June 2016

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning June 27

Indicator
Weekly Level / Change / Significance
Implication for
S & P 500
Implication for Nifty*
S & P 500
2037, -1.63%
Bearish
Bearish
Nifty
8089, -1.00%
Neutral**
Bearish
China Shanghai Index
2854, -1.07%
Bearish
Bearish
Gold
1319, 1.34%
Bullish
Bullish
WTIC Crude
47.57, -2.64%
Bearish
Bearish
Copper
2.12, 3.14%
Bullish
Bullish
Baltic Dry Index
609, 3.75%
Bullish
Bullish
Euro
1.115, -1.50%
Bearish
Bearish
Dollar/Yen
102.35, -1.71%
Bearish
Bearish
Dow Transports
7320, -3.55%
Bearish
Bearish
High Yield (ETF)
35.10, 0.43%
Neutral
Neutral
US 10 year Bond Yield
1.58%, -2.41%
Bullish
Bullish
Nyse Summation Index
772, -1.44%
Bearish
Neutral
US Vix
25.76, 32.72%
Bearish
Bearish
20 DMA, S and P 500
2021, Above
Bullish
Neutral
50 DMA, S and P 500
2092, Below
Bearish
Neutral
200 DMA, S and P 500
2080, Below
Bearish
Neutral
20 DMA, Nifty
8192, Below
Neutral
Bearish
50 DMA, Nifty
7993, Above
Neutral
Bullish
200 DMA, Nifty
7775, Above
Neutral
Bullish
India Vix
18.63, 7.36%
Neutral
Bearish
Dollar/Rupee
67.90, 1.24%
Neutral
Bearish


Overall


S & P 500


Nifty

Bullish Indications

5

6
Bearish Indications
10
11
Outlook
Bearish
Bearish
Observation
The Sand P 500 and the Nifty were down last week following Brexit. Indicators are bearish. Markets are breaking down from resistance and are headed significantly lower in the near term.
On the Horizon
China – PMI, Japan – CPI, Canada - GDP, Euro zone – German employment data, CPI, Euro Zone CPI, Euro vote on Brexit, U.S – Consumer confidence, Personal consumption expenditure, ISM
*Nifty
India’s Benchmark Stock Market Index
Raw Data
Courtesy Google finance, Stock charts, FXCM
**Neutral
Changes less than 0.5% are considered neutral



The US market the Nifty fell last week. Signals are bearish for the upcoming week. The markets are breaking down after failing at resistance several times. The Vix, Transports and the Yen are flashing crash alerts.  The India Vix is much lower than the US Vix suggesting complacency. There could be a catch up to the downside in the Indian Market soon. The critical levels to watch are 2050 (up) and 2025 (down) on the S & P and 8150 (up) and 8000 (down) on the Nifty. A significant breach of the above levels could trigger the next big move in the above markets. You can check out last week’s report for a comparison. You can also check out support and resistance levels of the S and P 500 and Nifty Indices. Love your thoughts and feedback.

Wednesday, 22 June 2016

Gold Rush Coming?

Is a gold rush coming much like in 2000 and have gold bears got it wrong this time around, Here is an interesting take from our partners at the The WallStreet Window:

Proof that the Gold Bears are Wrong – Mike Swanson

I am bullish on gold and I own gold and mining stocks, because gold is in a bull market. I have been trying to do my best to tell people this, but many people simply do not believe it. Gold and the mining stocks went through a very brutal bear market for five years and that makes it hard for people to believe that any of the rallies are real.

 What is more there are several “experts” that keep calling for gold to fall to $1,000 or even $250 an ounce that are scaring people out of gold. If you read this post you will see why these gold bears are wrong and know the one thing you need to know now that proves that gold is in a new bull market.
Then you will know that you do not have to be afraid and that you can take action. This is why people are looking at it.

gold 1

What people are seeing is a rally up to $1,300 in gold this year and a pullback of that level happening right now.That pullback is making gold bears call for a crash again and scaring people out of gold and I know because I am getting lots of emails from people scared or trying to jump out of mining stocks in hopes of buying in at a much lower price.

This rally in gold has brought an over 100% gain for most mining stocks and has made the mining stock sector the best performing sector in the entire stock market so far this year. Those in mining stocks this year are killing the stock market. And yet people are scared of a giant gold drop. Here is what I see:

gold 2


When you step back and look at the big picture of gold it is obvious that gold was in a bear market for a few years. You know that, but what is important is that during bear markets the 150 and 200-day moving averages slope down and act as resistance. But in January gold smashed through these moving averages and now those moving averages are turning up to act as support. I use classic stage analysis to identify whether a market is in a bull or bear market and it is obvious that gold is in a bull market now:

market stages

There are four stages to a financial market cycle in a stock or an entire financial market. As you know you can have a bull market. Before a bull market starts though you usually have a stage one basing phase in which a market simply goes sideways and builds a base. Then it breaks out and begins a full blown stage two bull market that typically lasts for several years. Then there is a stage three topping phase and then a stage four bear market.

There are various technical indicators you can use to determine when these stages are coming to an end so you can make the proper adjustments. That's a topic a little too big to get into now, but we can look at the basics right now. I can quickly show you one important indicator to watch to identify the trend the market is in. That's the long-term 150-day moving average, which is simply a line plotted on a chart using the average price number of the past 150-days.

In a bull market this line slopes up on a chart and the price of the market tends to stay above it, so it acts as a nice price support level in a bull market to make for a good entry point timing mechanism.
In a bear market this line slopes down on a chart and the price of the market tends to stay below it and it acts as resistance. So you can use this moving average to quickly identify the trend of a market. Then you can know if you should be bullish on a market or not.

Of course I have been pointing this out for the past several months and it has not stopped the gold bears from predicting more gold crashes and has not stopped people from trying to jump in and out of gold every time there is a little weakness so let me show you one more thing that is even more important. There is a huge powerful trend that happens in gold bull markets and that is that the mining stocks tend to lead the price of gold higher.

In bear markets the opposite happens. When there is a gold bear market the mining stocks tend to fall much more than the price of gold does. At big tops in gold and silver the mining stocks often stop going up. So when silver prices made a final top in 2011 the mining stocks simply sat there as silver went higher.

And now this year the mining stocks are leading gold up. When gold has a temporary pullback they just come off their highs a little bit and then go up more. Now you can chart out whether the mining stocks are doing better than gold or worse by using the simple HUI divided by the price of gold ratio.
Take a look at it:

hui gold ratio

As you can see the mining stocks lagged gold for years and a few months ago just started a new huge powerful trend of leading gold higher and outperforming gold.This is a huge predictor of gains to come for both mining stocks and gold and proves that the gold bears are simply wrong and mistaken.

For more on this visit our partner Michael Swanson on his website www.wallstreetwindow.com.

Sunday, 19 June 2016

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning June 20

Indicator
Weekly Level / Change
Implication for
S & P 500
Implication for Nifty*
S & P 500
2071, -1.19%
Bearish
Bearish
Nifty
8170, 0.00%
Neutral**
Neutral
China Shanghai Index
2885, -1.44%
Bearish
Bearish
Gold
1302, 1.98%
Bullish
Bullish
WTIC Crude
48.86, -0.04%
Neutral
Neutral
Copper
2.05, 1.33%
Bullish
Bullish
Baltic Dry Index
587, -3.93%
Bearish
Bearish
Euro
1.122, -0.22%
Neutral
Neutral
Dollar/Yen
104.22, -2.51%
Bearish
Bearish
Dow Transports
7590, -2.25%
Bearish
Bearish
High Yield (ETF)
34.95, -0.94%
Bearish
Bearish
US 10 year Bond Yield
1.62%, -1.28%
Bullish
Bullish
Nyse Summation Index
784, -20.89%
Bearish
Neutral
US Vix
19.41, 13.98%
Bearish
Bearish
20 DMA, S and P 500
2089, Below
Bearish
Neutral
50 DMA, S and P 500
2078, Below
Bearish
Neutral
200 DMA, S and P 500
2017, Above
Bullish
Neutral
20 DMA, Nifty
8123, Above
Neutral
Bullish
50 DMA, Nifty
7935, Above
Neutral
Bullish
200 DMA, Nifty
7768, Above
Neutral
Bullish
India Vix
17.35, 8.64%
Neutral
Bearish
Dollar/Rupee
67.06, 0.14%
Neutral
Neutral


Overall


S & P 500


Nifty

Bullish Indications
4

6
Bearish Indications
10
8
Outlook
Bearish
Bearish
Observation
The S and P 500 fell and the Nifty was unchanged last week. Indicators are bearish.
Markets are breaking down from resistance. Time to tighten those stops.
On the Horizon
Euro zone – German ZEW survey, England – Brexit vote,
U.S – Durable goods
*Nifty
India’s Benchmark Stock Market Index
Raw Data
Courtesy Google finance, Stock charts, FXCM
**Neutral
Changes less than 0.5% are considered neutral

The S and P 500 fell and the Nifty was unchanged last week. Signals are bearish for the upcoming week. The Vix, transports and the yen are flashing major warning signs. The markets are breaking down from resistance and are likely to continue major breakdowns in 2016. The critical levels to watch are 2080 (up) and 2060 (down) on the S & P and 8250 (up) and 8100 (down) on the Nifty. A significant breach of the above levels could trigger the next big move in the above markets. You can check out last week’s report for a comparison. You can also check out support and resistance levels of the S and P 500 and Nifty Indices. Love your thoughts and feedback.


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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.