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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Saturday, 15 October 2016

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning October 17

Indicator
Weekly Level / Change
Implication for
S & P 500
Implication for Nifty*
S & P 500
2133, -0.96%
Bearish
Bearish
Nifty
8583, -1.31%
Neutral**
Bearish
China Shanghai Index
3064, 1.97%
Bullish
Bullish
Gold
1256, 0.29%
Neutral
Neutral
WTIC Crude
50.75, 1.89%
Bullish
Bullish
Copper
2.11, -2.45%
Bearish
Bearish
Baltic Dry Index
892, -3.15%
Bearish
Bearish
Euro
1.097, -2.06%
Bearish
Bearish
Dollar/Yen
104.16, 1.21%
Bullish
Bullish
Dow Transports
8039, -0.22%
Neutral
Neutral
High Yield (ETF)
36.58, -0.27%
Neutral
Neutral
US 10 year Bond Yield
1.79%, 3.34%
Bearish
Bearish
Nyse Summation Index
217, -50.36%
Bearish
Neutral
US Vix
16.12, 19.58%
Bearish
Bearish
20 DMA, S and P 500
2154, Below
Bearish
Neutral
50 DMA, S and P 500
2165, Below
Bearish
Neutral
200 DMA, S and P 500
2069, Above
Bullish
Neutral
20 DMA, Nifty
8724, Below
Neutral
Bearish
50 DMA, Nifty
8706, Below
Neutral
Bearish
200 DMA, Nifty
8035, Above
Neutral
Bullish
India Vix
14.89, 2.78%
Neutral
Bearish
Dollar/Rupee
66.71, 0.15%
Neutral
Neutral


Overall


S & P 500


Nifty

Bullish Indications
4

4
Bearish Indications
9
10
Outlook
Bearish
Bearish
Observation
The S and P 500 and the Nifty fell last week. Indicators are bearish.
Markets are failing at resistance again. Time to tighten those stops.
On the Horizon
China – GDP, Australia – Employment data, New Zealand – CPI, UK – CPI,
Euro zone – ECB rate decision,
Canada – CPI, Rate decision, U.S – CPI, Presidential race debate
*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

stock market rising wedge



The S and P 500 and the Nifty fell last week. Signals are bearish for the upcoming week. Market momentum and breadth have been showing divergences for months now and sentiment indicators are still highly complacent and a big breakdown will likely start soon. It is interesting to see most risk assets suddenly moving together much like in 2008. This is setting us up for some serious downside unless recent resistance gets taken out soon. The market is struggling to get past its 50 DMA and gold just made a massive move down which is deflationary. Short term we are oversold but any oversold bounces may not last long. The critical levels to watch are 2140 (up) and 2120 (down) on the S & P and 8700 (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. 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.