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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

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Wednesday, 27 July 2016

Some Developing Non Conformations in the Stock Market

With yet another Fed day arriving there are a number of non conformations in the market which have not matched recent highs in the stock market. Charts are courtesy nasdaq.com:
sp500 stock chart

1) No new highs in the Transports in over 1.5 years:
transports stock chart

2) The same holds for the Russel 2000 small cap Index:
russel stock chart

 3) Financial stocks are lagging way behind:
financials stock chart

4) Oil stocks are nowhere near their yearly highs:
oil stock chart

5) Base metals like copper and related stocks are lagging way behind as well:
base metal stock chart

6) Last but not the least the CBOE Volatility Index the Vix (Chart from marketwatch.com) is yet to take out its yearly lows:

vix stock chart
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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.