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 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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Is a Recession Imminent?

Definition of a Recession: The textbook definition of a recession is two quarters of negative GDP growth. Some examples of recessions in...

Sunday, 19 August 2018

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

Indicator
Weekly Level / Change
Implication for
S & P 500
Implication for Nifty*
S & P 500
2850, 0.59%
Bullish
Neutral
Nifty
11471, 0.36%
Neutral **
Neutral
China Shanghai Index
2669, -4.52%
Bearish
Bearish
Gold
1184, -2.85%
Bearish
Bearish
WTIC Crude
65.21, -3.58%
Bearish
Bearish
Copper
2.63, -4.14%
Bearish
Bearish
Baltic Dry Index
1723, 1.89%
Bullish
Bullish
Euro
1.1444, 0.24%
Neutral
Neutral
Dollar/Yen
110.57, -0.26%
Neutral
Neutral
Dow Transports
11228, 1.24%
Bullish
Bullish
High Yield (ETF)
35.86, 0.14%
Neutral
Neutral
US 10 year Bond Yield
2.87%, 0.56%
Bearish
Bearish
Nyse Summation Index
427, -13.34%
Bearish
Neutral
US Vix
12.64, -3.95%
Bullish
Bullish
Skew
146
Bearish
Bearish
20 DMA, S and P 500
2833, Above
Bullish
Neutral
50 DMA, S and P 500
2793, Above
Bullish
Neutral
200 DMA, S and P 500
2715, Above
Bullish
Neutral
20 DMA, Nifty
11310, Above
Neutral
Bullish
50 DMA, Nifty
11015, Above
Neutral
Bullish
200 DMA, Nifty
10619, Above
Neutral
Bullish
India Vix
13.16, 2.41%
Neutral
Bearish
Dollar/Rupee
69.78, 1.01%
Neutral
Bearish


Overall


S & P 500


Nifty

Bullish Indications
7
6
Bearish Indications
7
8
Outlook
Neutral
Bearish
Observation
The S and P 500 was and the Nifty were up last week. Indicators are mixed.
The markets are close to making secondary tops. Watch those stops.
On the Horizon
Euro Zone – German GDP, U.S – FED Speak, Canada – Retail sales
*Nifty
India’s Benchmark Stock Market Index
Raw Data
Courtesy Google finance, Stock charts, investing.com
**Neutral
Changes less than 0.5% are considered neutral


stock market signals august 20


The S and P 500 and the Nifty were up last week. Indicators are mixed for the upcoming week. This rally is close to a major secondary top in key asset classes which is going to be followed by a massive selloff most likely a deflationary collapse. Quantitative tightening by the FED is yet to be priced in fully. The markets are still trading well over 3 standard deviations above their long term averages from which corrections usually result. Tail risk is also very high. The critical levels to watch for the week are 2860 (up) and 2840 (down) on the S & P 500 and 11550 (up) and 11400 (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.


Thursday, 16 August 2018

Why a Massive Selloff in Risk Assets Could be Just a Few Days Away?

First market breadth is diverging with the New 52 week high low indicator not confirming the recent retest of highs in the S and P 500:

S&P 500 vs S&P 500 Stocks at 52-Wk Highs Minus Lows (S&P 500 NH-NL)

High beta segment of the market such as the Nasdaq is beginning to under perform the broader market much like in 2000:

S&P 500 vs Nasdaq Relative to its 200-Day Moving Average (Nasdaq R200)

The Skew Vix ratio as shown on stockcharts has spiked into double digits recently suggesting high tail risk, which is often a precursor to rising volatility and a risk off trade set up:

skew vix ratio


















All this as we are in the middle of an emerging market currency crisis much like in 1998 unsupported by a tightening FED:

Sunday, 12 August 2018

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning August 13

Indicator
Weekly Level / Change
Implication for
S & P 500
Implication for Nifty*
S & P 500
2833, -0.25%
Neutral
Neutral
Nifty
11430, 0.60%
Neutral **
Bullish
China Shanghai Index
2795, 2.00%
Bullish
Bullish
Gold
1219, -0.34%
Neutral
Neutral
WTIC Crude
67.63, -1.26%
Bearish
Bearish
Copper
2.74, -0.76%
Bearish
Bearish
Baltic Dry Index
1691, -4.62%
Bearish
Bearish
Euro
1.1418, -1.36%
Bearish
Bearish
Dollar/Yen
110.83, -0.38%
Neutral
Neutral
Dow Transports
11090, -0.06%
Neutral
Neutral
High Yield (ETF)
35.81, -0.17%
Neutral
Neutral
US 10 year Bond Yield
2.86%, -3.25%
Bullish
Bullish
Nyse Summation Index
421, -8.82%
Bearish
Neutral
US Vix
13.16, 13.06%
Bearish
Bearish
Skew
149
Bearish
Bearish
20 DMA, S and P 500
2825, Above
Bullish
Neutral
50 DMA, S and P 500
2785, Above
Bullish
Neutral
200 DMA, S and P 500
2709, Above
Bullish
Neutral
20 DMA, Nifty
11222, Above
Neutral
Bullish
50 DMA, Nifty
10956, Above
Neutral
Bullish
200 DMA, Nifty
10598, Above
Neutral
Bullish
India Vix
12.85, 6.40%
Neutral
Bearish
Dollar/Rupee
69.08, 0.86%
Neutral
Bearish


Overall


S & P 500


Nifty

Bullish Indications
5
6
Bearish Indications
7
8
Outlook
Bearish
Bearish
Observation
The S and P 500 was down and the Nifty was up last week. Indicators are bearish.
The markets are close to making secondary tops. Watch those stops.
On the Horizon
Australia Employment data, Euro Zone – German GDP, CPI, U.KEmployment data, CPI, Retail sales, U.S – Retail sales, Canada – CPI
*Nifty
India’s Benchmark Stock Market Index
Raw Data
Courtesy Google finance, Stock charts, investing.com
**Neutral
Changes less than 0.5% are considered neutral


stock market signals august 13


The S and P 500 fell and the Nifty was up last week. Indicators are bearish for the upcoming week. This rally is close to a major secondary top in key asset classes which is going to be followed by a massive selloff. Quantitative tightening by the FED is yet to be priced in fully. The markets are still trading well over 3 standard deviations above their long term averages from which corrections usually result. Tail risk is also very high. The critical levels to watch for the week are 2845 (up) and 2820 (down) on the S & P 500 and 11500 (up) and 11300 (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 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.