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.

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Time Series Analysis with GRETL

This video shows key time-series analyses techniques such as ARIMA, Granger Causality, Co-integration, and VECM performed via GRETL. Key dia...

Monday 30 September 2024

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning September 30

 

Asset Class

Weekly Level / Change

Implication for S & P 500

Implication for Nifty*

S & P 500

5738, 0.62%

Bullish

Bullish

Nifty

26179, 1.50%

Neutral **

Bullish

China Shanghai Index

3088, 12.81%

Bullish

Bullish

Gold

2681, 1.75%

Bullish

Bullish

WTIC Crude

68.64, -4.56%

Bearish

Bearish

Copper

4.59, 5.68%

Bullish

Bullish

CRB Index

286, 1.26%

Bullish

Bullish

Baltic Dry Index

2110, 6.73%

Bullish

Bullish

Euro

1.1163, 0.01%

Neutral

Neutral

Dollar/Yen

142.19, -1.20%

Bearish

Bearish

Dow Transports

16186, 2.74%

Bullish

Neutral

Corporate Bonds (ETF)

113.26, -0.17%

Neutral

Neutral

High Yield Bonds (ETF)

97.79, 0.05%

Neutral

Neutral

US 10-year Bond Yield

3.75%, 0.26%

Neutral

Neutral

NYSE Summation Index

1105, 6%

Bullish

Neutral

US Vix

16.96, 5.02%

Bearish

Neutral

S & P 500 Skew

161

Bearish

Neutral

CNN Fear & Greed Index

Greed

Bearish

Neutral

Nifty MMI Index

Greed

Neutral

Bearish

20 DMA, S & P 500

5616, Above

Bullish

Neutral

50 DMA, S & P 500

5530, Above

Bullish

Neutral

200 DMA, S & P 500

5229, Above

Bullish

Neutral

20 DMA, Nifty

25453, Above

Neutral

Bullish

50 DMA, Nifty

24955, Above

Neutral

Bullish

200 DMA, Nifty

23029, Above

Neutral

Bullish

S & P 500 P/E

29.94

Bearish

Neutral

Nifty P/E

24.34

Neutral

Bearish

India Vix

11.96, -6.47%

Neutral

Bullish

Dollar/Rupee

83.72, 0.29%

Neutral

Neutral

 

 

Overall

 

 

S & P 500

 

 

Nifty

 

Bullish Indications

11

11

Bearish Indications

6

4

 

Outlook

Bullish

Bullish

Observation

 

The S&P and the Nifty rose last week. Indicators are bullish for the week.

Markets are back at resistance. Watch those stops.

On the Horizon

US – Employment data, UK – GDP, Eurozone – CPI

*Nifty

 

India’s Benchmark Stock Market Index

Raw Data

Data courtesy stockcharts.com, investing.com, multpl.com, nseindia.com, tickertape.in

**Neutral

Changes less than 0.5% are considered neutral

 


The S&P 500 and the Nifty rose last week. Indicators are bullish for the week. Markets are back at resistance. We are transitioning from an inflationary regime to a deflationary one. The sentiment is in greed mode, and risk-reward is poor at these levels. Carry trade liquidation may resume as we enter a seasonally weak period. The Nifty is back at new highs and will likely underperform.

The past week saw US equity markets rise. Most emerging markets rose even as interest rates remained stable. Transports rose. The Baltic dry index rose. The dollar was unchanged. Commodities rose. Valuations are expensive, market breadth rose, and the sentiment is bullish. This week, fear (S&P 500) rose post the FED Pivot.

After this rally, a currency crisis should resume and push risky assets to new lows. Despite the recent inflationary spike, deflation is in the air, and bonds are telegraphing just that. Feels like a 2008-style recession trade has begun, with a potential for a decline in risk assets across the board. The current market is tracking closely the 2000 moves down in the S&P 500, implying a panic low right ahead in the upcoming months (My views do not matter, kindly pay attention to the levels). A dollar rebound from major support is a likely catalyst.

The S&P 500 is correcting from all-time highs. We have bounced from recent lows without capitulation. This suggests the lows may not be in, and the regime has changed from buying the dip to selling the rip. We may get a final flush down soon. Risky assets should continue breaking to the downside as earnings growth peaks. The Fed has aggressively tightened into a recession. Deflationary busts often begin after major inflationary scares. After correcting significantly, the market has made new highs, and more is left on the downside. The Dollar, commodities, and bond yields continue to flash major warning signs.

Global yield curves have steepened after inverting significantly, reflecting a major economic slowdownThe recent steepening of the yield curve, within an inverted context, with rates falling, is a precursor to the next recession, and the riskiest assets will underperform going forward under such conditions. 

The critical levels to watch for the week are 5750 (up) and 5725 (down) on the S&P 500 and 26250 (up) and 26100 (down) on the Nifty. A significant breach of the above levels could trigger the next big move in the above markets.  High beta / P/E will get torched again and likely be a sell on every rise. Gold increasingly looks like the asset class (though overextended short-term) to own over the next decade. (Gold exploded almost eight times higher over the decade following the dot-com bust in 2000. Imagine what would happen when this AI bubble bursts? following the recent crypto bubble burst) You can check out last week’s report for a comparison. Love your thoughts and feedback.

 

 

Monday 23 September 2024

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning September 23

 

Asset Class

Weekly Level / Change

Implication for S & P 500

Implication for Nifty*

S & P 500

5703, 1.36%

Bullish

Bullish

Nifty

25791, 1.71%

Neutral **

Bullish

China Shanghai Index

2737, 1.21%

Bullish

Bullish

Gold

2647, 1.39%

Bullish

Bullish

WTIC Crude

70.33, 3.56%

Bullish

Bullish

Copper

4.33, 2.30%

Bullish

Bullish

CRB Index

282, 3.12%

Bullish

Bullish

Baltic Dry Index

1977, 4.60%

Bearish

Bearish

Euro

1.1162, 0.78%

Bullish

Bullish

Dollar/Yen

143.91, 2.19%

Bullish

Bullish

Dow Transports

15755, 0.16%

Neutral

Neutral

Corporate Bonds (ETF)

113.45, 0.21%

Neutral

Neutral

High Yield Bonds (ETF)

97.74, 0.71%

Bullish

Bullish

US 10-year Bond Yield

3.74%, 2.44%

Bearish

Bearish

NYSE Summation Index

1045, 26%

Bullish

Neutral

US Vix

16.15, -2.48%

Bullish

Neutral

S & P 500 Skew

166

Bearish

Neutral

CNN Fear & Greed Index

Greed

Bearish

Neutral

Nifty MMI Index

Greed

Neutral

Bearish

20 DMA, S & P 500

5586, Above

Bullish

Neutral

50 DMA, S & P 500

5518, Above

Bullish

Neutral

200 DMA, S & P 500

5200, Above

Bullish

Neutral

20 DMA, Nifty

25213, Above

Neutral

Bullish

50 DMA, Nifty

24806, Above

Neutral

Bullish

200 DMA, Nifty

22887, Above

Neutral

Bullish

S & P 500 P/E

29.77

Bearish

Neutral

Nifty P/E

23.98

Neutral

Bearish

India Vix

12.79, 1.91%

Neutral

Bearish

Dollar/Rupee

83.47, -0.48%

Neutral

Neutral

 

 

Overall

 

 

S & P 500

 

 

Nifty

 

Bullish Indications

14

13

Bearish Indications

5

5

 

Outlook

Bullish

Bullish

Observation

 

The S&P and the Nifty rose last week. Indicators are bullish for the week.

Markets are back at resistance. Watch those stops.

On the Horizon

US – GDP, FED Talk

*Nifty

 

India’s Benchmark Stock Market Index

Raw Data

Data courtesy stockcharts.com, investing.com, multpl.com, nseindia.com, tickertape.in

**Neutral

Changes less than 0.5% are considered neutral

 


The S&P 500 and the Nifty rose last week. Indicators are bullish for the week. Markets are back at resistance. We are transitioning from an inflationary regime to a deflationary one. The sentiment is in greed mode, and risk-reward is poor at these levels. Carry trade liquidation may resume as we enter a seasonally weak period. The Nifty is back at new highs and will likely underperform.

The past week saw US equity markets rise. Most emerging markets rose even as interest rates rose. Transports were unchanged. The Baltic dry index rose. The dollar fell. Commodities rose. Valuations are expensive, market breadth rebounded, and the sentiment is bullish. This week, fear (S&P 500) eased lower on the FED Pivot.

After this rally, a currency crisis should resume and push risky assets to new lows. Despite the recent inflationary spike, deflation is in the air, and bonds are telegraphing just that. Feels like a 2008-style recession trade has begun, with a potential for a decline in risk assets across the board. The current market is tracking closely the 2000 moves down in the S&P 500, implying a panic low right ahead in the upcoming months (My views do not matter, kindly pay attention to the levels). A dollar rebound from major support is a likely catalyst.

The S&P 500 is correcting from all-time highs. We have bounced from recent lows without capitulation. This suggests the lows may not be in, and the regime has changed from buying the dip to selling the rip. We may get a final flush down soon. Risky assets should continue breaking to the downside as earnings growth peaks. The Fed has aggressively tightened into a recession. Deflationary busts often begin after major inflationary scares. After correcting significantly, the market has made new highs, and more is left on the downside. The Dollar, commodities, and bond yields continue to flash major warning signs.

Global yield curves have steepened after inverting significantly, reflecting a major economic slowdownThe recent steepening of the yield curve, within an inverted context, with rates falling, is a precursor to the next recession, and the riskiest assets will underperform going forward under such conditions. 

The critical levels to watch for the week are 5715 (up) and 5690 (down) on the S&P 500 and 25850 (up) and 25700 (down) on the Nifty. A significant breach of the above levels could trigger the next big move in the above markets.  High beta / P/E will get torched again and likely be a sell on every rise. Gold increasingly looks like the asset class (though overextended short-term) to own over the next decade. (Gold exploded almost eight times higher over the decade following the dot-com bust in 2000. Imagine what would happen when this AI bubble bursts? following the crypto bubble burst) 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.