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, 12 November 2016

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning November 14

Indicator
Weekly Level / Change
Implication for
S & P 500
Implication for Nifty*
S & P 500
2165, 3.80%
Bullish
Bullish
Nifty
8296, -1.63%
Neutral**
Bearish
China Shanghai Index
3196, 2.26%
Bullish
Bullish
Gold
1224, -6.15%
Bearish
Bearish
WTIC Crude
43.40, -1.50%
Bearish
Bearish
Copper
2.51, 10.77%
Bullish
Bullish
Baltic Dry Index
1045, 22.22%
Bullish
Bullish
Euro
1.089, -2.50%
Bearish
Bearish
Dollar/Yen
106.68, 3.49%
Bullish
Bullish
Dow Transports
8579, 6.24%
Bullish
Bullish
High Yield (ETF)
35.13, -1.93%
Bearish
Bearish
US 10 year Bond Yield
2.13%, 20.00%
Bearish
Bearish
Nyse Summation Index
-299, -7.71%
Bearish
Neutral
US Vix
24.17, -37.05%
Bullish
Bullish
20 DMA, S and P 500
2133, Below
Bullish
Neutral
50 DMA, S and P 500
2146, Below
Bullish
Neutral
200 DMA, S and P 500
2090, Above
Bullish
Neutral
20 DMA, Nifty
8573, Below
Neutral
Bearish
50 DMA, Nifty
8684, Below
Neutral
Bearish
200 DMA, Nifty
8116, Above
Neutral
Bullish
India Vix
17.36, 3.07%
Neutral
Bearish
Dollar/Rupee
67.54, 1.12%
Neutral
Bearish


Overall


S & P 500


Nifty

Bullish Indications
10

8
Bearish Indications
6
10
Outlook
Bulllish
Bearish
Observation
The S and P 500 bounced back and the Nifty fell hard last week. Indicators are mixed.
The oversold bounce is largely over and downside is about to resume. Time to tighten those stops.
On the Horizon
Japan – GDP, Australia – Employment data, Canada - CPI, Euro Zone – German, Italian and Euro Zone GDP, German ZEW survey, UK-CPI, US – Retail sales, CPI
*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

s and p 500 rising wedge


The S and P 500 rallied and the Nifty fell hard last week. Signals are mixed for the upcoming week. Market momentum and breadth have been showing divergences for months now and sentiment indicators are finally catching up to the downside and a big breakdown will likely start soon. Bond yields have made a dramatic surge up and risky segments of the market like high yield and emerging markets are breaking down. The critical levels to watch are 2175 (up) and 2155 (down) on the S & P and 8400 (up) and 8200 (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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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.