About

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.

Featured post

Time Series Analysis with GRETL

This video shows key time-series analyses techniques such as ARIMA, Granger Causality, Co-integration, and VECM performed via GRETL. Key dia...

Wednesday 20 May 2015

Grexit will eventually happen, time to position for the next big move in the market

After #Greece defaulted on the #IMF, Greeks rejected the austerity plan proposed by the EU comprehensively. We now have had a bailout package for Greece. The IMF has expressed concerns about joining the bailout adding to the uncertainty. Eventually after all the bailouts a #Grexit may prove to be the only way out. Regardless some key markets are poised for big moves:

Let us take a look at the #Euro first. The Euro appears to have put in a near term top near it's recent highs near the 1.16 level and has been correcting lower. It appears to be poised for a big move and has already corrected below the 1.13 level. Like the Euro 1.11 put with the 1.13 call as a hedge.

EUR/USD (EURUSD=X)
PureVPN
Next let us look at #oil which has broken down from its highs near 62$.
Can play the next move likely to the downside to 40$ via the oil 44 put with the 46 call as a hedge or via a strangle on the oil ETF USO. Oil will likely head to 35 in the upcoming months.
United States Oil ETF (USO)
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Moving onto gold, #Gold seems to be headed for new lows after breaking the 1100 mark. Following the news flow out of Greece and the strong dollar further weakness looks likely despite the recent flight to safety bid. Like the 108 put on the Gold ETF GLD, The 110 call may be considered as a hedge:
SPDR Gold Shares (GLD)


Not to forget the #SandP500, which has corrected from its recent highs near 2135 to about 1867. A short term down move to 1900 appears on the cards and can be played via a 1970 put with a 2010 call as a hedge.
S&P 500 (^GSPC)

dowjones
 Finally the #Nifty has been breaking down from its recent highs near 8650. Can trade the next big move down to 7800 via the 7900 put with the 8100 call as a hedge.
CNX NIFTY (^NSEI)

Friday 15 May 2015

Stock Market Signals for the US and Indian Stock Markets for the Upcoming Week beginning May18

Indicator
Weekly Level / Change / Significance
Implication for
S & P 500
Implication for Nifty*
S & P 500
2123, 0.31%
Neutral**
Neutral
Nifty
8262, 0.90%
Neutral
Bullish
China Shanghai Index
4309, 2.44%
Bullish
Bullish
Gold
1223, 3.02%
Bullish
Bullish
WTIC Crude
59.96, 0.82%
Bullish
Bullish
Copper
2.93, 0.58%
Bullish
Bullish
Baltic Dry Index
634, 10.45%
Bullish
Bullish
Euro
1.146, 2.29%
Bullish
Bullish
Dollar/Yen
119.35, 0.39%
Neutral
Neutral
Dow Transports
8681, -0.98%
Bearish
Bearish
Nyse Summation Index
254, -17%
Bearish
Bearish
US Vix
12.38, -3.73%
Bullish
Bullish
20 DMA, S and P 500
2105, Above
Bullish
Neutral
50 DMA, S and P 500
2089, Above
Bullish
Neutral
200 DMA, S and P 500
2033, Above
Bullish
Neutral
20 DMA, Nifty
8283, Below
Neutral
Bearish
50 DMA, Nifty
8522, Below
Neutral
Bearish
200 DMA, Nifty
8299, Below
Neutral
Bearish
India Vix
19.82, 3.7%
Neutral
Bearish
Dollar/Rupee
63.38, -0.5%
Neutral
Bullish




Overall
 S & P 500
Nifty

Bullish Indications
10
9

Bearish Indications
2
6

Outlook
Bullish
Bullish

Observation
The S and P 500 is at the top of its trading range close to all time highs while the Nifty is sitting just below its 20 and 200 DMA. The summation index and transports are still diverging.


On the Horizon
Greece, EU and UK Inflation Data, EU Consumer confidence, Japanese GDP, US and Canada CPI






*Nifty
India’s Benchmark Stock Index


Raw Data
Courtesy Google finance, Stock charts


**Neutral
Changes less than 0.5% are considered neutral








Thursday 14 May 2015

Rounding Top Pattern in the Indian Stock Market Nifty Index Suggests Lower levels for the Nifty in the Months Ahead

The weekly chart of the Indian stock market Nifty index shows a rounding top formation that targets 6000 on the Index. This coincides with a rounding bottom that is forming on the weekly chart in the India Vix which is a measure of Indian stock market volatility suggesting an upsurge in volatility in the upcoming months. The pattern suggests a level of 35 for the India #Vix up over 50% from current levels. This implies significant downside for the Nifty in the upcoming months.
Incidentally the India Vix has traded below the US Vix recently and a catch up to the upside is likely as the India Vix tends to be significantly higher than the US Vix.


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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.