Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning December 12

Indicator	Weekly Level / Change	Implication for S & P 500	Implication for Nifty*
S & P 500	2260, 3.08%	Bullish	Bullish
Nifty	8262, 2.16%	Neutral**	Bullish
China Shanghai Index	3233, -0.34%	Neutral	Neutral
Gold	1162, -1.35%	Bearish	Bearish
WTIC Crude	51.50, -0.35%	Neutral	Neutral
Copper	2.65, 0.86%	Bullish	Bullish
Baltic Dry Index	1090, -9.02%	Bearish	Bearish
Euro	1.056, -1.06%	Bearish	Bearish
Dollar/Yen	115.31, 1.56%	Bullish	Bullish
Dow Transports	9407, 3.96%	Bullish	Bullish
High Yield (ETF)	36.46, 1.25%	Bullish	Bullish
US 10 year Bond Yield	2.46%, 3.10%	Bearish	Bearish
Nyse Summation Index	345, 213.81%	Bullish	Neutral
US Vix	11.75, -16.78%	Bullish	Bullish
20 DMA, S and P 500	2201, Above	Bullish	Neutral
50 DMA, S and P 500	2164, Above	Bullish	Neutral
200 DMA, S and P 500	2118, Above	Bullish	Neutral
20 DMA, Nifty	8119, Abve	Neutral	Bullish
50 DMA, Nifty	8422, Below	Neutral	Bearish
200 DMA, Nifty	8189, Above	Neutral	Bullish
India Vix	15.07, -15.98%	Neutral	Bullish
Dollar/Rupee	67.46, -0.84%	Neutral	Bullish
Overall	S & P 500	Nifty
Bullish Indications	11	10
Bearish Indications	4	6
Outlook	Bulllish	Bearish
Observation	The S and P 500 and the Nifty rallied last week. Indicators are bullish. The Trump bounce has extended into way over bought territory. Time to watch those stops.
On the Horizon	Australia – Employment data, Euro zone – ZEW survey, U.S – Retail sales, FOMC rate decision, CPI, UK – CPI, Rate decision, Switzerland – Rate decsion
*Nifty	India’s Benchmark Stock Market Index
Raw Data	Courtesy Google finance, Stock charts, dailyfx.com
**Neutral	Changes less than 0.5% are considered neutral

The S and P 500 and the Nifty rallied last week. Signals are bullish for the upcoming week. A FED rate hike is yet to be priced in and sentiment indicators are back in complacent mode. The big frenzy up has begun with a positive Dow Theory conformation. Bond yields have made a dramatic surge up and risky segments of the market like emerging markets are under performing on broad dollar strength. The critical levels to watch are 2270 (up) and 2250 (down) on the S & P and 8300 (up) and 8200 (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.

Gold - The Then and Now

Gold prices have been incredibly volatile this year and are currently near the middle of the observed range in 2016 near $ 1175/ Ounce having started the year close to $1075 / Ounce and trading as high as $1375 / Ounce during the course of the year. Gold often benefits from increased liquidity in the financial system and has been traditionally viewed as a hedge against inflation. Gold also tends to have a safe haven status and tends to benefit during financial crises when Central Banks flood the world with liquidity. So thinking ahead lets take a look at what is in store for Gold prices?

To do this let us look at the historical performance of Gold since the Great Recession of 2008. Three years after the start of the Bernanke Fed's quantitative easing program in the United States, gold prices reached a high we've still yet to see again as this gold chart based on events that affected the price of gold and gold IRAs over the past few years since the Financial Collapse of 2008 shows. Recovering back from its January 2016 low by March, another peak in May before reaching July's high of around $1387 per ounce so far this year for GCG7 (February Gold Futures) traded on CME and Eurex exchanges looks a bit short-lived, given today's February Gold Futures price of $1173 as on December 8 2016.

As can be seen above Gold surged sharply higher between 2008 and 2011 following Quantitative easing (QE) embarked by central banks across the globe. The gold price well over doubled from reaching as high as $1975 in August 2011. From there Gold endured a sharp correcting falling over 40% and reaching the $1050 mark in December 2015 following the first FED rate hike and the end of QE. With no further FED hikes forth coming Gold resumed its upswing reaching a high of $1387 following Brexit. However following the Trump win in the US presidential election Gold has sold off yet again on prospects of reflation, a strong Dollar and an upcoming FED hike.

With the FED taking center stage yet again It would be interesting to see if the sell off in Gold continues on a strengthening Dollar from a possible FED hike or Would gold become a safe haven play yet again much like in December 2015 and benefit from capital outflows from risky assets like stocks and emerging market currencies?

Daily Forex Insight

Here are some insights from the currency strategists at dailyfx. They cover the fundamentals and technicals of key Forex pairs and other key markets along with some of the key economic news of the day. Today's commentary looks at the upcoming ECB meeting: