About

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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Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning June 26

Indicator Weekly Level / Change Implication for S & P 500 Implication for Nifty* ...

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Wednesday, 29 April 2015

Has the Fed Ignited the Sell in May and Go Away Trade?

First and foremost most fed meetings are positive for the stock market. The fed usually gives the market what it wants and the markets keep going up and away. The last fed meeting stocks rallied after the fed successfully jaw boned the dollar into submission. Since then stocks have rallied and are encountering major resistance at the top end of their trading ranges.
S&P 500 (^GSPC)
The dollar has sold off close to 5% but has already contributed to  very weak quarterly earnings reports from several global powerhouses. With Greece lurking in the shadows any Euro strength may be short lived going forward and a resumption of broader dollar strength is likely.
EUR/USD (EURUSD=X)
This could spell trouble for commodities like gold and oil and other risk assets.
SPDR Gold Shares (GLD)
United States Oil ETF (USO)

Eventually carry trade liquidation could spread to stock indices, with some recent bastions of strength like the German and Indian markets already showing some cracks.
DAX (^GDAXI)
CNX NIFTY (^NSEI)

Eventually markets will come around to the realization that QE forever polices globally have artificially propped up asset prices and their implosion is just around the corner in a painful and protracted process, with the "Sell in May and Go Away" trade just round the corner.

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Cash - 40%
Bonds - 20%
Fixed deposit - 20%
Gold - 5%
Stocks - 10% ( Majority of this in dividend funds)
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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.