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, 18 November 2024

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning November 18

 

Asset Class

Weekly Level / Change

Implication for S & P 500

Implication for Nifty*

S & P 500

5871, -2.08%

Bearish

Bearish

Nifty

23533, -2.55%

Neutral **

Bearish

China Shanghai Index

3331, -3.52%

Bearish

Bearish

Gold

2570, -4.63%

Bearish

Bearish

WTIC Crude

66.92, -4.92%

Bearish

Bearish

Copper

4.06, -5.61%

Bearish

Bearish

CRB Index

280, -0.70%

Bearish

Bearish

Baltic Dry Index

1785, 19.40%

Bullish

Bullish

Euro

1.0541, -1.65%

Bearish

Bearish

Dollar/Yen

154.34, 1.12%

Bullish

Bullish

Dow Transports

17228, -0.73%

Bearish

Neutral

Corporate Bonds (ETF)

108.26, -1.45%

Bearish

Bearish

High Yield Bonds (ETF)

96.36, -0.73%

Bearish

Bearish

US 10-year Bond Yield

4.44%, 3.22%

Bearish

Bearish

NYSE Summation Index

277, -24%

Bearish

Neutral

US Vix

16.14, 8.03%

Bearish

Neutral

S & P 500 Skew

150

Bearish

Neutral

CNN Fear & Greed Index

Neutral

Neutral

Neutral

Nifty MMI Index

Fear

Neutral

Bullish

20 DMA, S & P 500

5860, Above

Bullish

Neutral

50 DMA, S & P 500

5772, Above

Bullish

Neutral

200 DMA, S & P 500

5411, Above

Bullish

Neutral

20 DMA, Nifty

24269, Below

Neutral

Bearish

50 DMA, Nifty

24913, Below

Neutral

Bearish

200 DMA, Nifty

23530, Above

Neutral

Bullish

S & P 500 P/E

30.00

Bearish

Neutral

Nifty P/E

21.65

Neutral

Bearish

India Vix

14.78, 2.11%

Neutral

Bearish

Dollar/Rupee

84.42, 0.03%

Neutral

Neutral

 

 

Overall

 

 

S & P 500

 

 

Nifty

 

Bullish Indications

5

4

Bearish Indications

15

15

 

Outlook

Bearish

Bearish

Observation

 

The S&P and the Nifty fell last week. Indicators are bearish for the week.

Markets are topping. Watch those stops.

On the Horizon

Eurozone – German GDP, CPI, UK – 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 and the Nifty fell last week. Indicators are bearish for the week. Markets are topping. We are transitioning from an inflationary regime to a deflationary one. The sentiment is neutral, and risk-reward is poor at these levels. Carry trade liquidation may resume even as we enter a seasonally strong period. The Nifty has corrected from recent highs and will likely underperform after an oversold bounce.

The past week saw US equity markets fall. Most emerging markets fell as interest rates rose. Transports fell. The Baltic dry index rose. The dollar rose. Commodities fell. Valuations are expensive, market breadth fell, and the sentiment is neutral. Fear (S&P 500) rose as the reality of the FED pivot is kicking in.

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. It 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 significant support is a likely catalyst.

The S&P 500 is at 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 are flashing significant 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 5885 (up) and 5860 (down) on the S&P 500 and 23600 (up) and 23450 (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 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, 11 November 2024

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

 

Asset Class

Weekly Level / Change

Implication for S & P 500

Implication for Nifty*

S & P 500

5996, 4.66%

Bullish

Bullish

Nifty

24148, -0.64%

Neutral **

Bearish

China Shanghai Index

3452, 5.51%

Bullish

Bullish

Gold

2695, -1.98%

Bearish

Bearish

WTIC Crude

70.38, 1.28%

Bullish

Bullish

Copper

4.31, -1.50%

Bearish

Bearish

CRB Index

282, 0.80%

Bullish

Bullish

Baltic Dry Index

1495, 8.49%

Bullish

Bullish

Euro

1.0718, -1.07%

Bearish

Bearish

Dollar/Yen

152.63, -0.23%

Neutral

Neutral

Dow Transports

17354, 6.13%

Bullish

Neutral

Corporate Bonds (ETF)

109.85, 1.70%

Bullish

Bullish

High Yield Bonds (ETF)

97.07, 1.39%

Bullish

Bullish

US 10-year Bond Yield

4.31%,- 1.82%

Bullish

Bullish

NYSE Summation Index

364, -3%

Bearish

Neutral

US Vix

14.94, -31.72%

Bullish

Neutral

S & P 500 Skew

150

Bearish

Neutral

CNN Fear & Greed Index

Greed

Bearish

Neutral

Nifty MMI Index

Fear

Neutral

Bullish

20 DMA, S & P 500

5832, Above

Bullish

Neutral

50 DMA, S & P 500

5728, Above

Bullish

Neutral

200 DMA, S & P 500

5385, Above

Bullish

Neutral

20 DMA, Nifty

24519, Below

Neutral

Bearish

50 DMA, Nifty

25030, Below

Neutral

Bearish

200 DMA, Nifty

23488, Above

Neutral

Bullish

S & P 500 P/E

30.66

Bearish

Neutral

Nifty P/E

22.27

Neutral

Bearish

India Vix

14.47, -9.01%

Neutral

Bullish

Dollar/Rupee

84.40, 0.37%

Neutral

Neutral

 

 

Overall

 

 

S & P 500

 

 

Nifty

 

Bullish Indications

13

11

Bearish Indications

7

7

 

Outlook

Bullish

Bullish

Observation

 

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

Markets are topping. Watch those stops.

On the Horizon

US – CPI, PPI, Eurozone – German CPI, UK – GDP, Japan – GDP

*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 rose and the Nifty fell last week. Indicators are bullish for the week. Markets are topping. 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 even as we enter a seasonally strong period. The Nifty is correcting from recent highs and will likely underperform after an oversold bounce.

The past week saw US equity markets rise. Most emerging markets rose as interest rates fell. Transports rose. The Baltic dry index rose. The dollar rose. Commodities rose. Valuations are expensive, market breadth fell, and the sentiment is in greed mode. Fear (S&P 500) abated as the reality of the FED pivot are kicking in.

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. It 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 significant support is a likely catalyst.

The S&P 500 is at 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 are flashing 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 6010 (up) and 5985 (down) on the S&P 500 and 24250 (up) and 24050 (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.

 

 

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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.