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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.

Sunday, 26 July 2015

Stock Market Signals for the US and Indian Stock Markets for the Week beginning July 27

Indicator	Weekly Level / Change / Significance	Implication for S & P 500	Implication for Nifty*
S & P 500	2080, -2.21%	Bearish	Bearish
Nifty	8522, -1.03%	Neutral**	Bearish
China Shanghai Index	4071, 2.87%	Bullish	Bullish
Gold	1098, -2.99%	Bearish	Bearish
WTIC Crude	47.96, -5.55%	Bearish	Bearish
Copper	2.39, -4.25%	Bearish	Bearish
Baltic Dry Index	1086, 3.63%	Bullish	Bullish
Euro	1.0974, 1.18%	Bullish	Bullish
Dollar/Yen	123.76, -0.24%	Neutral	Neutral
Dow Transports	8073, -2.67%	Bearish	Bearish
US 10 year Bond Yield	2.27%, -3.32%	Bullish	Bullish
Nyse Summation Index	-282, -33.57%	Bearish	Neutral
US Vix	13.74, 14.98%	Bearish	Bearish
20 DMA, S and P 500	2091, Below	Bearish	Neutral
50 DMA, S and P 500	2102, Below	Bearish	Neutral
200 DMA, S and P 500	2064, Above	Bullish	Neutral
20 DMA, Nifty	8485, Above	Neutral	Bullish
50 DMA, Nifty	8343, Above	Neutral	Bullish
200 DMA, Nifty	8406, Above	Neutral	Bullish
India Vix	15.46, 4.42%	Neutral	Bearish
Dollar/Rupee	64.10, 0.97%	Neutral	Bearish

Overall	S & P 500	Nifty
Bullish Indications	5	7
Bearish Indications	12	9
Outlook	Bearish	Bearish
Observation	The Sand P 500 gave up the prior week’s gains and was down over 2% last week while the Nifty was down 1%. Indicators are bearish. The summation index, vix and transports are flashing warning signs. Market cycles are not favorable into mid August, so I am looking for more downside.
On the Horizon	US durable goods and consumer confidence, US FOMC decision, UK GDP, German unemployment data and CPI, US GDP, Japan CPI, Euro zone CPI, Canada GDP, China PMI

*Nifty	India’s Benchmark Stock Index
Raw Data	Courtesy Google finance, Stock charts, Dailyfx
**Neutral	Changes less than 0.5% are considered neutral

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Signals are bearish for the upcoming week. Bearish divergences and unfavorable market cycles into August could result in a sharp and sustainable correction near term. You can check out last weeks report for a comparison.You can also check out snapshots of the S and P 500 and Nifty Indices.

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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.

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Sunday, 26 July 2015

Stock Market Signals for the US and Indian Stock Markets for the Week beginning July 27

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