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Ahead of the Curve provides you with analysis and insight into today's global financial markets. The latest news and views from global stock, bond, commodity and FOREX markets are discussed. Rajveer Rawlin is a PhD and 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 23 October 2016

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning October 24

Indicator
Weekly Level / Change
Implication for
S & P 500
Implication for Nifty*
S & P 500
2141, 0.38%
Neutral
Neutral
Nifty
8693, 1.28%
Neutral**
Bullish
China Shanghai Index
3091, 0.89%
Bullish
Bullish
Gold
1268, 0.97%
Bullish
Bullish
WTIC Crude
50.85, 0.20%
Neutral
Neutral
Copper
2.09, -1.04%
Bearish
Bearish
Baltic Dry Index
842, -5.61%
Bearish
Bearish
Euro
1.089, -0.77%
Bearish
Bearish
Dollar/Yen
103.82, -0.32%
Neutral
Neutral
Dow Transports
8027, -0.16%
Neutral
Neutral
High Yield (ETF)
36.84, 0.71%
Bullish
Bullish
US 10 year Bond Yield
1.74%, -3.01%
Bullish
Bullish
Nyse Summation Index
135, -37.85%
Bearish
Neutral
US Vix
13.34, -17.25%
Bullish
Bullish
20 DMA, S and P 500
2149, Below
Bearish
Neutral
50 DMA, S and P 500
2160, Below
Bearish
Neutral
200 DMA, S and P 500
2072, Above
Bullish
Neutral
20 DMA, Nifty
8693, At
Neutral
Neutral
50 DMA, Nifty
8710, Below
Neutral
Bearish
200 DMA, Nifty
8055, Above
Neutral
Bullish
India Vix
13.83, -7.01%
Neutral
Bullish
Dollar/Rupee
66.92, 0.31%
Neutral
Neutral


Overall


S & P 500


Nifty

Bullish Indications
6

8
Bearish Indications
6
4
Outlook
Neutral
Bullish
Observation
The S and P 500 and the Nifty bounced back last week. Indicators are mildly bullish.
Markets are failing at resistance again. Time to tighten those stops.
On the Horizon
Japan – CPI, Australia – CPI, UK – GDP,
Euro zone – German CPI,
US – Durable goods, Consumer confidence, GDP, Personal consumption, Trade balance
*Nifty
India’s Benchmark Stock Market Index
Raw Data
Courtesy Google finance, Stock charts, dailyfx.com
**Neutral
Changes less than 0.5% are considered neutral

s & p 500 rising wedge 1



The S and P 500 and the Nifty rallied last week. Signals are slightly bullish for the upcoming week. Market momentum and breadth have been showing divergences for months now and sentiment indicators are still highly complacent and a big breakdown will likely start soon. It is interesting to see most risk assets suddenly moving together much like in 2008. This is setting us up for some serious downside unless recent resistance gets taken out soon. The market is struggling to get past its 50 DMA and gold recently made a massive move down which is deflationary. Short term we are oversold but any oversold bounces may not last long. The critical levels to watch are 2150 (up) and 2130 (down) on the S & P and 8800 (up) and 8600 (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. Love your thoughts and feedback.

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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.