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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, 24 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 26

Indicator
Weekly Level / Change
Implication for
S & P 500
Implication for Nifty*
S & P 500
2747, 0.55%
Bullish
Bullish
Nifty
10491, 0.37%
Neutral **
Neutral
China Shanghai Index
3289, 2.81%
Bullish
Bullish
Gold
1330, -1.91%
Bearish
Bearish
WTIC Crude
63.55, 3.25%
Bullish
Bullish
Copper
3.21, -1.11%
Bearish
Bearish
Baltic Dry Index
1167, 7.16%
Bullish
Bullish
Euro
1.2295, -0.89%
Bearish
Bearish
Dollar/Yen
106.82, 0.56%
Bullish
Bullish
Dow Transports
10579, 0.73%
Bullish
Bullish
High Yield (ETF)
36.26, -0.17%
Neutral
Neutral
US 10 year Bond Yield
2.87%, -0.21%
Neutral
Neutral
Nyse Summation Index
-43, 48.88%
Bullish
Neutral
US Vix
16.49, -15.26%
Bullish
Bullish
Skew
139
Neutral
Neutral
20 DMA, S and P 500
2727, Above
Bullish
Neutral
50 DMA, S and P 500
2731, Above
Bullish
Neutral
200 DMA, S and P 500
2553, Above
Bullish
Neutral
20 DMA, Nifty
10639, Below
Neutral
Bearish
50 DMA, Nifty
10610, Below
Neutral
Bearish
200 DMA, Nifty
10098, Above
Neutral
Bullish
India Vix
14.20, -13.28%
Neutral
Bullish
Dollar/Rupee
64.84, 0.69%
Neutral
Bearish


Overall


S & P 500


Nifty

Bullish Indications
11
9
Bearish Indications
3
6
Outlook
Bullish
Bullish
Observation
The S and P 500 and the Nifty were up slightly last week. Indicators are bullish.
The markets have made important tops. Time to watch those stops.
On the Horizon
China – PMI’s, Euro Zone – German employment data, German PMI, CPI, UK – PMI’s, U.S – Oil inventories, GDP, Powell speech, Durable goods, Consumer confidence, Home sales, ISM PMI, Employment data, Canada – GDP
*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 26
 Image from marketwatch.com

The S and P 500 and the Nifty moved up slightly last week. Indicators are bullish for the upcoming week. The recent rally has been supported by excessive fear which continues to be at elevated levels. 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 2760 (up) and 2735 (down) on the S & P and 10550 (up) and 10400 (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.