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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Sunday, 28 August 2016

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning August 29

Indicator
Weekly Level / Change
Implication for
S & P 500
Implication for Nifty*
S & P 500
2169, -0.68%
Bearish
Bearish
Nifty
8573, -1.09%
Neutral**
Bearish
China Shanghai Index
3070, -1.22%
Bearish
Bearish
Gold
1326, -1.51%
Bearish
Bearish
WTIC Crude
47.64, -2.99%
Bearish
Bearish
Copper
2.08, -3.81%
Bearish
Bearish
Baltic Dry Index
720, 5.42%
Bullish
Bullish
Euro
1.120, -1.13%
Bearish
Bearish
Dollar/Yen
101.77, 1.62%
Bullish
Bullish
Dow Transports
7825, -1.33%
Bearish
Bearish
High Yield (ETF)
36.54, 0.00%
Neutral
Neutral
US 10 year Bond Yield
1.64%, 3.61%
Bearish
Bearish
Nyse Summation Index
879, -11.42%
Bearish
Neutral
US Vix
13.65, 20.37%
Bearish
Bearish
20 DMA, S and P 500
2178, Below
Bearish
Neutral
50 DMA, S and P 500
2144, Above
Bullish
Neutral
200 DMA, S and P 500
2052, Above
Bullish
Neutral
20 DMA, Nifty
8630, Below
Neutral
Bearish
50 DMA, Nifty
8482, Above
Neutral
Bullish
200 DMA, Nifty
7890, Above
Neutral
Bullish
India Vix
13.57, -6.66%
Neutral
Bullish
Dollar/Rupee
67.16, 0.05%
Neutral
Neutral


Overall


S & P 500


Nifty

Bullish Indications
4

5
Bearish Indications
11
11
Outlook
Bearish
Bearish
Observation
The S and P 500 and the Nifty fell last week. Indicators are bearish.
Markets are breaking down from the top of their recent trading ranges. Time to tighten those stops.
On the Horizon
China – PMI, Canada - GDP, Euro zone – German employment data, CPI, Euro Zone CPI, U.S – Consumer confidence, Employment data, ISM
*Nifty
India’s Benchmark Stock Market Index
Raw Data
Courtesy Google finance, Stock charts, dailyfx.com
**Neutral
Changes less than 0.5% are considered neutral



The S and P 500 and the Nifty fell last week. Signals are bearish for the upcoming week. The Vix is suggesting complacency despite the market making nominal new highs and momentum, breadth and sentiment indicators are showing divergences.  The markets are likely to continue major breakdowns in 2016 which could start any moment now. The critical levels to watch are 2180 (up) and 2160 (down) on the S & P and 8650 (up) and 8500 (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. You can also check out support and resistance levels of the S and P 500 and Nifty Indices. Love your thoughts and feedback.

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Cash - 40%
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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.