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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, 4 February 2018

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning February 05

Indicator
Weekly Level / Change
Implication for
S & P 500
Implication for Nifty*
S & P 500
2762, -3.85%
Bearish
Bearish
Nifty
10761, -2.79%
Neutral **
Bearish
China Shanghai Index
3462, -2.70%
Bearish
Bearish
Gold
1337, -1.09%
Bearish
Bearish
WTIC Crude
65.45, -1.04%
Bearish
Bearish
Copper
3.19, -0.36%
Neutral
Neutral
Baltic Dry Index
1114, -8.46%
Bearish
Bearish
Euro
1.2458, 0.25%
Neutral
Neutral
Dollar/Yen
110.17, 1.41%
Bullish
Bullish
Dow Transports
10687, -3.94%
Bearish
Bearish
High Yield (ETF)
36.27, -1.33%
Bearish
Bearish
US 10 year Bond Yield
2.85%, 7.21%
Bearish
Bearish
Nyse Summation Index
384, -44.58%
Bearish
Neutral
US Vix
17.31, 56.23%
Bearish
Bearish
Skew
127
Neutral
Neutral
20 DMA, S and P 500
2802, Below
Bearish
Neutral
50 DMA, S and P 500
2715, Above
Bullish
Neutral
200 DMA, S and P 500
2532, Above
Bullish
Neutral
20 DMA, Nifty
10846, Below
Neutral
Bearish
50 DMA, Nifty
10546, Above
Neutral
Bullish
200 DMA, Nifty
10013, Above
Neutral
Bullish
India Vix
15.25, -12.89%
Neutral
Bullish
Dollar/Rupee
64.23, 0.93%
Neutral
Bearish


Overall


S & P 500


Nifty

Bullish Indications
3
4
Bearish Indications
11
12
Outlook
Bearish
Bearish
Observation
The S and P 500 and the Nifty fell sharply last week. Indicators are bearish.
The markets are making important tops. Time to watch those stops.
On the Horizon
Australia – Retail sales, RBA rate decision, New Zealand – Employment data, RBNZ rate decision, China – PMI, UK – PMI data, BOE rate decision, Manufacturing production, U.S – ISM data, Oil inventories, Canada – PMI, Employment data,  India – Rate decision, Russia - Rate decision
*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 february 05

The S and P 500 and the Nifty fell sharply last week. Signals are bearish for the upcoming week. Quantitative tightening by the FED is yet to be priced in fully 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 yield, transports and surging bond yields are flashing some warning signs. An interest rate shock can’t be ruled out. The critical levels to watch are 2775 (up) and 2750(down) on the S & P and 10850 (up) and 10700 (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.