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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 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, 21 January 2018

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning January 22

Indicator
Weekly Level / Change
Implication for
S & P 500
Implication for Nifty*
S & P 500
2810, 0.86%
Bullish
Bullish
Nifty
10895, 2.00%
Neutral **
Bullish
China Shanghai Index
3488, 1.72%
Bullish
Bullish
Gold
1333, -0.13%
Neutral
Neutral
WTIC Crude
63.31, -1.54%
Bearish
Bearish
Copper
3.19, -0.96%
Bearish
Bearish
Baltic Dry Index
1139, -12.59%
Bearish
Bearish
Euro
1.2223, 0.20%
Neutral
Neutral
Dollar/Yen
110.82, -0.17%
Neutral
Neutral
Dow Transports
11305, -0.60%
Bearish
Bearish
High Yield (ETF)
36.82, -0.11%
Neutral
Neutral
US 10 year Bond Yield
2.63%, 3.33%
Bearish
Bearish
Nyse Summation Index
682, -3.96%
Neutral
Bearish
US Vix
11.27, 10.93%
Bearish
Bearish
Skew
132
Neutral
Neutral
20 DMA, S and P 500
2732, Above
Bullish
Neutral
50 DMA, S and P 500
2666, Above
Bullish
Neutral
200 DMA, S and P 500
2508, Above
Bullish
Neutral
20 DMA, Nifty
10603, Above
Neutral
Bullish
50 DMA, Nifty
10408, Above
Neutral
Bullish
200 DMA, Nifty
9931, Above
Neutral
Bullish
India Vix
13.98, 1.82%
Neutral
Bearish
Dollar/Rupee
63.85, 0.52%
Neutral
Bearish


Overall


S & P 500


Nifty

Bullish Indications
5
6
Bearish Indications
6
8
Outlook
Bearish
Bearish
Observation
The S and P 500 and the Nifty made new highs last week. Indicators are bearish.
The markets have gone parabolic. Time to watch those stops.
On the Horizon
New Zealand – CPI, Japan – BOJ outlook, Euro Zone – German ZEW economic sentiment, German IFO business climate index, German PMI, ECB rate decision, UK – Employment data, GDP, U.S – Home sales, Oil inventories, Durable goods, GDP, Canada – Retail sales, CPI
*Nifty
India’s Benchmark Stock Market Index
Raw Data
Courtesy Google finance, Stock charts, investing.com
**Neutral
Changes less than 0.5% are considered neutral

stock market signals january 22


The S and P 500 and the Nifty made new highs last week. Signals are bearish for the upcoming week. Quantitative tightening by the FED is yet to be priced in and sentiment indicators are back in complacency mode. The markets are still trading well over 3 standard deviations above their long term averages from which corrections usually result. Divergences in high yields and surging bond yields are flashing some warning signs. An interest rate shock can’t be ruled out. The critical levels to watch are 2820 (up) and 2800(down) on the S & P and 11000 (up) and 10800 (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.