About

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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Is a Recession Imminent?

Definition of a Recession: The textbook definition of a recession is two quarters of negative GDP growth. Some examples of recessions in...

Sunday, 25 March 2018

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning March 26

Indicator
Weekly Level / Change
Implication for
S & P 500
Implication for Nifty*
S & P 500
2588, -5.95%
Bearish
Bearish
Nifty
9998, -1.93%
Neutral **
Bearish
China Shanghai Index
3153, -3.58%
Bearish
Bearish
Gold
1350, 2.87%
Bullish
Bullish
WTIC Crude
65.88, 5.56%
Bullish
Bullish
Copper
2.99, -3.68%
Bearish
Bearish
Baltic Dry Index
1117, -2.87%
Bearish
Bearish
Euro
1.2357, 0.50%
Bullish
Bullish
Dollar/Yen
104.81, -1.15%
Bearish
Bearish
Dow Transports
10163, -4.87%
Bearish
Bearish
High Yield (ETF)
35.62, -0.97%
Bearish
Bearish
US 10 year Bond Yield
2.83%, -0.63%
Bullish
Bullish
Nyse Summation Index
129, -54.44%
Bearish
Neutral
US Vix
24.87, 57.41%
Bearish
Bearish
Skew
131
Neutral
Bearish
20 DMA, S and P 500
2724, Below
Bearish
Neutral
50 DMA, S and P 500
2742, Below
Bearish
Neutral
200 DMA, S and P 500
2585, Above
Bullish
Neutral
20 DMA, Nifty
10306, Below
Neutral
Bearish
50 DMA, Nifty
10549, Below
Neutral
Bearish
200 DMA, Nifty
10173, Below
Neutral
Bearish
India Vix
15.55, 2.14%
Neutral
Bearish
Dollar/Rupee
65.02, -0.10%
Neutral
Neutral


Overall


S & P 500


Nifty

Bullish Indications
5
4
Bearish Indications
11
14
Outlook
Bearish
Bearish
Observation
The S and P 500 and the Nifty fell last week. Indicators are bearish.
The markets have made important tops. Time to watch those stops.
On the Horizon
China – PMI, Euro Zone – German employment data, UK – GDP, U.S – Consumer Confidence, Home sales, Oil inventories, GDP, 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 march 26


The S and P 500 and the Nifty fell hard last week. Indicators are bearish 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. The yen and other safe haven asset classes are flashing warning signs. Indian market volatility is still well below US market volatility so there is complacency and some catch up left on the down side. The critical levels to watch are 2600 (up) and 2575 (down) on the S & P and 10100 (up) and 9900 (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.

Friday, 23 March 2018

Stock Market Panic Just Beginning?

Markets have been taking a turn for the worse on fears of a global trade war. A look at the Fear and Greed Index computed by CNNMoney shows that investor sentiment is hitting record lows:
fear and greed


However the Vix is yet to take out the February highs and suggests that there is no major panic yet:

volatility vix


Also the NYSE McClellan Summation Index (courtesy stockcharts) has just begun breaking down again following the recent rally and has more room to fall suggesting more selling ahead:

summation index


Taken together we probably are headed for more selling and panic that should take us a lot lower to the major break out zone of the S and P 500 near 2400 first before any relief rallies occur.

Sunday, 18 March 2018

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning March 19

Indicator
Weekly Level / Change
Implication for
S & P 500
Implication for Nifty*
S & P 500
2752, -1.24%
Bearish
Bearish
Nifty
10195, -0.31%
Neutral **
Neutral
China Shanghai Index
3270, -1.13%
Bearish
Bearish
Gold
1312, -0.88%
Bearish
Bearish
WTIC Crude
62.41, 0.60%
Bullish
Bullish
Copper
3.11, -0.91%
Bearish
Bearish
Baltic Dry Index
1150, -4.25%
Bearish
Bearish
Euro
1.2296, -0.09%
Neutral
Neutral
Dollar/Yen
106.04, -0.69%
Bearish
Bearish
Dow Transports
10684, -0.52%
Bearish
Bearish
High Yield (ETF)
35.97, -0.33%
Neutral
Neutral
US 10 year Bond Yield
2.85%, -1.59%
Bullish
Bullish
Nyse Summation Index
283, 73.22%
Bullish
Neutral
US Vix
15.80, 7.92%
Bearish
Bearish
Skew
147
Bearish
Bearish
20 DMA, S and P 500
2735, Above
Bullish
Neutral
50 DMA, S and P 500
2749, Above
Bullish
Neutral
200 DMA, S and P 500
2579, Above
Bullish
Neutral
20 DMA, Nifty
10380, Below
Neutral
Bearish
50 DMA, Nifty
10594, Below
Neutral
Bearish
200 DMA, Nifty
10161, Above
Neutral
Bullish
India Vix
15.22, 4.78%
Neutral
Bearish
Dollar/Rupee
65.08, 0.23%
Neutral
Neutral


Overall


S & P 500


Nifty

Bullish Indications
6
3
Bearish Indications
9
12
Outlook
Bearish
Bearish
Observation
The S and P 500 and the Nifty fell last week. Indicators are bearish.
The markets have made important tops. Time to watch those stops.
On the Horizon
Australia – RBA minutes, Employment data, New Zealand – RBNZ rate decision, Euro Zone – German ZEW economic sentiment, German PMI, German IFO business climate index, UK – CPI, Employment data, Retail sales, BOE rate decision, U.S – Home sales, Oil inventories, FOMC rate decision, Durable goods, Canada – CPI, Retail sales, 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 march 19
Image from marketwatch.com

The S and P 500 and the Nifty fell last week. Indicators are bearish 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. Under performance in high yield and other risk assets are flashing warning signs. An interest rate shock can’t be ruled out. Indian market volatility is still below US market volatility so there is complacency and some catch up left on the down side. The critical levels to watch are 2765 (up) and 2740 (down) on the S & P and 10300 (up) and 10100 (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 Asset Allocation Strategy (Indian Market)

Cash - 40%
Bonds - 20%
Fixed deposit - 20%
Gold - 5%
Stocks - 10% ( Majority of this in dividend funds)
Other Asset Classes - 5%

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.