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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, 30 September 2018

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning October 01

Indicator
Weekly Level / Change
Implication for
S & P 500
Implication for Nifty*
S & P 500
2914, -0.54%
Bearish
Bearish
Nifty
10931, -1.91%
Neutral **
Bearish
China Shanghai Index
2821, 0.85%
Bullish
Bullish
Gold
1196, -0.42%
Neutral
Neutral
WTIC Crude
73.25, 3.49%
Bullish
Bullish
Copper
2.81, -1.84%
Bearish
Bearish
Baltic Dry Index
1540, 8.99%
Bullish
Bullish
Euro
1.1596, -1.41%
Bearish
Bearish
Dollar/Yen
113.65, 0.98%
Bullish
Bullish
Dow Transports
11379, -1.33%
Bearish
Bearish
High Yield (ETF)
36.05, 0.19%
Neutral
Neutral
US 10 year Bond Yield
3.06%, -0.39%
Neutral
Neutral
Nyse Summation Index
227, -36.85%
Bearish
Neutral
US Vix
12.12, 3.77%
Bearish
Bearish
Skew
144
Bearish
Bearish
20 DMA, S and P 500
2902, Above
Bullish
Neutral
50 DMA, S and P 500
2868, Above
Bullish
Neutral
200 DMA, S and P 500
2757, Above
Bullish
Neutral
20 DMA, Nifty
11335, Below
Neutral
Bearish
50 DMA, Nifty
11345, Below
Neutral
Bearish
200 DMA, Nifty
10771, Above
Neutral
Bullish
India Vix
17.00, 9.40%
Neutral
Bearish
Dollar/Rupee
72.50, 0.41%
Neutral
Neutral


Overall


S & P 500


Nifty

Bullish Indications
7
5
Bearish Indications
7
9
Outlook
Neutral
Bearish
Observation
The S and P 500 and the Nifty were down last week. Indicators are mixed.
The markets are likely topping out. Watch those stops.
On the Horizon
Australia RBA rate decision, Canada – Employment data, US – Employment data, India RBI 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 october 01


The S and P 500 and the Nifty were down last week. Indicators are mixed for the upcoming week. Looking for significant under performance in the Nifty going forward on rapidly deteriorating macros. This rally is close to another major top in key asset classes which has already formed in the Euro and commodities amidst a number of bearish divergences. This is going to be followed by a massive selloff and most likely a deflationary collapse. 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. Tail risk is also very high. The critical levels to watch for the week are 2925 (up) and 2905 (down) on the S & P 500 and 11000 (up) and 10850 (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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Cash - 40%
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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.