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 is a PhD and 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.

Sunday 10 June 2018

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning June 11

Indicator	Weekly Level / Change	Implication for S & P 500	Implication for Nifty*
S & P 500	2779, 1.62%	Bullish	Bullish
Nifty	10768, 0.67%	Neutral **	Bullish
China Shanghai Index	3067, -0.26%	Neutral	Neutral
Gold	1303, 0.26%	Neutral	Neutral
WTIC Crude	65.74, -0.11%	Neutral	Neutral
Copper	3.30, 6.50%	Bullish	Bullish
Baltic Dry Index	1395, 27.98%	Bullish	Bullish
Euro	1.1778, 0.96%	Bullish	Bullish
Dollar/Yen	109.43, -0.08%	Neutral	Neutral
Dow Transports	10939, 0.41%	Neutral	Neutral
High Yield (ETF)	35.75, 0.68%	Bullish	Bullish
US 10 year Bond Yield	2.94%, 1.45%	Bearish	Bearish
Nyse Summation Index	688, 32.48%	Bullish	Neutral
US Vix	12.18, -9.51%	Bullish	Bullish
Skew	133	Neutral	Neutral
20 DMA, S and P 500	2732, Above	Bullish	Neutral
50 DMA, S and P 500	2687, Above	Bullish	Neutral
200 DMA, S and P 500	2647, Above	Bullish	Neutral
20 DMA, Nifty	10652, Above	Neutral	Bullish
50 DMA, Nifty	10576, Above	Neutral	Bullish
200 DMA, Nifty	10374, Above	Neutral	Bullish
India Vix	12.70, -6.43%	Neutral	Bullish
Dollar/Rupee	67.51, 0.87%	Neutral	Bearish
Overall	S & P 500	Nifty
Bullish Indications	10	10
Bearish Indications	1	2
Outlook	Bullish	Bullish
Observation	The S and P 500 and the Nifty rallied last week. Indicators are bullish. The markets have made important tops. Time to watch those stops.
On the Horizon	Australia – Employment data, Japan – BOJ rate decision, UK- Employment data, CPI, Retail sales, Euro – ECB rate decision, CPI, U.S – CPI, PPI, FOMC rate decision, Crude oil inventories, 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

The S and P 500 and the Nifty were up 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. The recent yield spike and dollar strength should limit upside in the short term. The critical levels to watch are 2790 (up) and 2770 (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 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.