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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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Saturday, 17 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 19

Indicator
Weekly Level / Change
Implication for
S & P 500
Implication for Nifty*
S & P 500
2732, 4.30%
Bullish
Bullish
Nifty
10452, -0.03%
Neutral **
Neutral
China Shanghai Index
3199, 2.21%
Bullish
Bullish
Gold
1356, 3.08%
Bullish
Bullish
WTIC Crude
61.55, 3.97%
Bullish
Bullish
Copper
3.25, 7.09%
Bullish
Bullish
Baltic Dry Index
1089, -1.54%
Bearish
Bearish
Euro
1.2405, 1.25%
Bullish
Bullish
Dollar/Yen
106.22, -2.35%
Bearish
Bearish
Dow Transports
10502, 3.61%
Bullish
Bullish
High Yield (ETF)
36.32, 1.79%
Bullish
Bullish
US 10 year Bond Yield
2.88%, 1.70%
Bearish
Bearish
Nyse Summation Index
-84, -53.79%
Bearish
Neutral
US Vix
19.46, -33.04%
Bullish
Bullish
Skew
132
Neutral
Neutral
20 DMA, S and P 500
2751, Below
Bearish
Neutral
50 DMA, S and P 500
2725, Above
Bullish
Neutral
200 DMA, S and P 500
2547, Above
Bullish
Neutral
20 DMA, Nifty
10781, Below
Neutral
Bearish
50 DMA, Nifty
10591, Below
Neutral
Bearish
200 DMA, Nifty
10071, Above
Neutral
Bullish
India Vix
16.38, -14.83%
Neutral
Bullish
Dollar/Rupee
64.39, 0.25%
Neutral
Neutral


Overall


S & P 500


Nifty

Bullish Indications
11
11
Bearish Indications
5
5
Outlook
Bullish
Bullish
Observation
The S and P 500 rebounded and the Nifty was unchanged last week. Indicators are bullish.
The markets have made important tops. Time to watch those stops.
On the Horizon
Australia – RBA minutes, Euro Zone – German ZEW economic sentiment, German GDP, German PMI, CPI, ECB minutes, German IFO business climate index, UK – Carney speech, Employment data, GDP, U.S – Oil inventories, FOMC minutes, Home sales, 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 february 19
                                                         chart source: marketwatch.com
The S and P 500 rebounded and the Nifty was little changed last week. Indicators are bullish for the upcoming week. Quantitative tightening by the FED is yet to be priced in fully. 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 warning signs. An interest rate shock can’t be ruled out. Indian market volatility is below US market volatility so there is complacency and some catch up left on the down side. The critical levels to watch are 2740 (up) and 2720 (down) on the S & P and 10550 (up) and 10350 (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.