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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 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.

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Sunday 24 February 2019

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning February 25

Indicator
Weekly Level / Change
Implication for
S & P 500
Implication for Nifty*
S & P 500
2793, 0.61%
Bullish
Bullish
Nifty
10792, 0.63%
Neutral **
Bullish
China Shanghai Index
2804, 4.54%
Bullish
Bullish
Gold
1333, 0.81%
Bullish
Bullish
WTIC Crude
57.26, 2.29%
Bullish
Bullish
Copper
2.95, 5.47%
Bullish
Bullish
Baltic Dry Index
634, -0.78%
Bearish
Bearish
Euro
1.1321, 0.26%
Neutral
Neutral
Dollar/Yen
110.66, 0.24%
Neutral
Neutral
Dow Transports
10593, 0.24%
Neutral
Neutral
High Yield (ETF)
35.59, 0.24%
Neutral
Neutral
US 10 year Bond Yield
2.66%, -0.41%
Neutral
Neutral
Nyse Summation Index
1253, 15.46%
Bullish
Neutral
US Vix
13.51, -9.39%
Bullish
Bullish
Skew
121
Neutral
Neutral
20 DMA, S and P 500
2725, Above
Bullish
Neutral
50 DMA, S and P 500
2625, Above
Bullish
Neutral
200 DMA, S and P 500
2748, Above
Bullish
Neutral
20 DMA, Nifty
10808, Below
Neutral
Bearish
50 DMA, Nifty
10823, Below
Neutral
Bearish
200 DMA, Nifty
10861, Below
Neutral
Bearish
India Vix
15.45, -6.14%
Neutral
Bullish
Dollar/Rupee
71.03 -0.41%
Neutral
Neutral


Overall


S & P 500


Nifty

Bullish Indications
10
8
Bearish Indications
1
4
Outlook
Bullish
Bullish
Observation
The S and P 500 and the Nifty rallied last week. Indicators are bullish for the week.
The markets are on the verge of a great depression style collapse. Watch those stops.
On the Horizon
US – Powell testimony, GDP, Euro Zone – German employment data, 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 25


The S and P 500 and the Nifty were up last week. Indicators are bullish for the upcoming week. QE forever from the FED is about to trigger the deflationary collapse of the century. The market got its oversold bounce of about 450 points but a 5 year bear market is in the making. The trend is changing from bullish to bearish. Looking for significant under performance in the Nifty going forward on rapidly deteriorating macros. The India vix has finally exceeded the US vix suggesting there may be a sudden catch up on the downside for the Indian market in 2019. A 5 year deflationary wave is about to start in key asset classes like the Euro, stocks and commodities amidst a number of bearish divergences and Hindenburg omens. We are on the verge of a multi-year great depression. 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 has been very high off late. The critical levels to watch for the week are 2800 (up) and 2780 (down) on the S & P 500 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.