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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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Showing posts with label us market. Show all posts
Showing posts with label us market. Show all posts

Monday 11 May 2015

Current Stock Market Outlook

The S and P 500 seems to have put in a major top near the 2135 mark. After violating it's 200 DMA near 2074 it has broken down again below the 50 DMA near 2040 to about 1880 near last years lows. The summation index after a big move down is in negative territory suggesting market internals are deteriorating. No new highs in the summation index in over 2 years suggests an eventual break down in the market. Major support for the market is now near 1875. Resistance is close to 1920. Outlook is bearish midterm but we could see a short term oversold bounce.

stock market
Transports are under performing down near multi year lows this week. The #DOW transports are continuing to under perform the broader market over the last 9 months and bearish divergences in the transports are now spreading to the rest of the market. No new highs in the transports for over 9 months now, a major DOW theory non conformation which implies more downside in the market soon:


The #Vix is headed up and has held support near the 12 mark several times and has now briefly crossed the 25 mark. Still no new lows for the Vix in over a year and a major push upwards is under way and will continue post an oversold bounce in the market. As more time elapses the Vix is looking increasingly bullish which is bad for the market:
PureVPN
#Oil  has broken down significantly lower below the 35 level. Further downside looks likely after any oversold bounces up to the 35 level.


The #Euro appears to be gearing for a bounce above the 1.09 level. The Euro is expected to come under more pressure following this with the 1.10 level acting as immediate resistance following a broad reduction in global risk appetite:

Indian markets have completed oversold bounces from lower levels but  weakness in the Rupee
and surging Indian market volatility are concerns going forward and relative under performance appears to be on the cards. The #Nifty has made fresh lows below the 7600 level. The 8000 level is strong resistance now and support is seen only near 7400 on this break lower:


Taken together the above indicators suggest that following any oversold bounces, markets are susceptible to sudden bouts of volatility and downside in the upcoming months as problems in the US junk bond market and China will remain in the backdrop with bearish divergences continuing to pile up.

Friday 8 May 2015

Stock Market Signals for the US and Indian Stock Markets for the Upcoming Week beginning May11

Indicator
Weekly Level / Change / Significance
Implication for S & P 500
Implication for Nifty*
S & P 500
2116, 0.40%
Neutral**
Neutral
Nifty
8192, 0.10%
Neutral
Neutral
China Shanghai Index
4206, -5.3%
Bearish
Bearish
Gold
1187, 0.90%
Bullish
Bullish
WTIC Crude
59.5, 0.40%
Neutral
Neutral
Copper
2.91, -0.90%
Bearish
Bearish
Baltic Dry Index
574, -2.20%
Bearish
Bearish
Euro
1.120, 0.10%
Neutral
Neutral
Dollar/Yen
119.76, -0.3%
Neutral
Neutral
Dow Transports
8767, 0.30%
Neutral
Neutral
Nyse Summation Index
306, -37%
Bearish
Bearish
US Vix
12.86, 1.30%
Bearish
Bearish
20 DMA, S and P 500
2102, Above
Bullish
Neutral
50 DMA, S and P 500
2089, Above
Bullish
Neutral
200 DMA, S and P 500
2030, Above
Bullish
Neutral
20 DMA, Nifty
8417, Below
Neutral
Bearish
50 DMA, Nifty
8574, Below
Neutral
Bearish
200 DMA, Nifty
8271, Below
Neutral
Bearish
India Vix
19.11, 11%
Neutral
Bearish
Dollar/Rupee
63.75, 0.1%
Neutral
Neutral




Overall
 S & P 500
Nifty

Bullish Indications
4
1

Bearish Indications
5
9

Outlook
Marginally Bearish
Bearish

Observation
The Sand P 500 is at the top of its trading range while the Nifty is at the lower end of its range. The summation index is still flashing warning signs.


On the Horizon
Greece, Italy and German GDP, US PPI and retail sales






*Nifty
India’s Benchmark Stock Index


Raw Data
Courtesy Google finance, Stock charts


**Neutral
Changes less than 0.5% are considered neutral








I have added three new indicators this week, the Chinese stock market index, the India Vix and the Dollar/Rupee rate.

Friday 1 May 2015

Stock Market Signals for the US and Indian Stock Markets for the week of May4

Indicator
Weekly Change / Significance
Implication for S & P 500
Implication for Nifty*
S & P 500
-0.40%
Bearish
Bearish
Nifty
-1.50%
Neutral
Bearish
Gold
-0.20%
Neutral
Neutral
WTIC Crude
3.20%
Bullish
Bearish
Copper
7.30%
Bullish
Bullish
Baltic Dry Index
-2.20%
Bearish
Bearish
Euro
3.00%
Bullish
Bullish
Yen
-1.10%
Bullish
Bullish
Dow Transports
-1.60%
Bearish
Bearish
Nyse Summation Index
-14.10%
Bearish
Bearish
US Vix
3.30%
Bearish
Bearish
20 DMA, S and P 500
Above
Bullish
Neutral
50 DMA, S and P 500
Above
Bullish
Neutral
200 DMA, S and P 500
Above
Bullish
Neutral
20 DMA, Nifty
Below
Neutral
Bearish
50 DMA, Nifty
Below
Neutral
Bearish
200 DMA, Nifty
Below
Neutral
Bearish




Overall
 S & P 500
Nifty

Bullish Indications
7
3

Bearish Indications
5
10

Outlook
Marginally Bullish
Bearish

Observation
Summation index and Vix are flashing warning signs


On the Horizon
US Payrolls, Greece, UK elections






*Nifty
India’s Benchmark Stock Index


Raw Data
Courtesy yahoo finance, Stock charts






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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.