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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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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 January 2016

Extreme Bearish Sentiment, Odds of a Bounce are increasing

Sentiment has reached extremes on bearishness off late so I wont be surprised to see a bounce in the broader market soon. Two indicators of market fear seem to be stalling:


First  the US Vix is stalling near the 27 mark in an oversold market:
Second  the Yen is encountering resistance near the 117 mark:
USD/JPY (JPY=X)

Expecting a count trend oversold bounce to the 1900-1920 zone on the S and P 500 and the 7450-7500 area on the Nifty. Expecting gold to out perform and reach the 1150 mark.

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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.