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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 18 December 2016

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning December 19

Indicator
Weekly Level / Change
Implication for
S & P 500
Implication for Nifty*
S & P 500
2258, -0.06%
Neutral
Neutral
Nifty
8140, -1.48%
Neutral**
Bearish
China Shanghai Index
3123, -3.40%
Bearish
Bearish
Gold
1137, -2.11%
Bearish
Bearish
WTIC Crude
52.95, 2.82%
Bullish
Bullish
Copper
2.56, -3.14%
Bearish
Bearish
Baltic Dry Index
946, -13.21%
Bearish
Bearish
Euro
1.045, -1.02%
Bearish
Bearish
Dollar/Yen
117.97, 2.34%
Bullish
Bullish
Dow Transports
9168, -2.55%
Bearish
Bearish
High Yield (ETF)
36.29, -0.47%
Neutral
Neutral
US 10 year Bond Yield
2.60%, 5.40%
Bearish
Bearish
Nyse Summation Index
403, 16.66%
Bullish
Neutral
US Vix
12.20, 3.83%
Bearish
Bearish
20 DMA, S and P 500
2223, Above
Bullish
Neutral
50 DMA, S and P 500
2174, Above
Bullish
Neutral
200 DMA, S and P 500
2125, Above
Bullish
Neutral
20 DMA, Nifty
8128, Above
Neutral
Bullish
50 DMA, Nifty
8372, Below
Neutral
Bearish
200 DMA, Nifty
8214, Below
Neutral
Bearish
India Vix
15.25, 1.23%
Neutral
Bearish
Dollar/Rupee
67.85, 0.56%
Neutral
Bearish


Overall


S & P 500


Nifty

Bullish Indications
6

3
Bearish Indications
8
13
Outlook
Bearish
Bearish
Observation
The S and P 500 was unchanged and the Nifty fell last week. Indicators are bearish.
The Trump bounce is largely over. Time to watch those stops.
On the Horizon
New Zealand - GDP, Japan – Rate decision, U.S – GDP, durable goods, Canada – CPI, GDP
*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

stock market outlook


The S and P 500 was unchanged and the Nifty fell last week. Signals are bearish for the upcoming week. The FED rate hike is yet to be priced in and sentiment indicators are back in complacent mode. Transports are beginning to under perform. Bond yields have made a dramatic surge up and risky segments of the market like emerging markets are breaking down on broad dollar strength. The critical levels to watch are 2270 (up) and 2250 (down) on the S & P and 8200 (up) and 8050 (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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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.