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.

Featured post

Forecasting the S & P 500 - A Time Series Approach

 Using time-series data from 2015-2020, a forecast is made for the first 10 weeks of 2021. An Arima 2,1,2 model is fit using Gretl. Results ...

Sunday, 2 May 2021

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning May 03

Indicator

Weekly Level / Change

Implication for

S & P 500

Implication for Nifty*

S & P 500

4181, 0.02%

Neutral

Neutral

Nifty

14631, 2.02%

Neutral **

Bullish

China Shanghai Index

3447, -0.79%

Bearish

Bearish

Gold

1769, -0.47%

Neutral

Neutral

WTIC Crude

63.48, 2.16%

Bullish

Bullish

Copper

4.46, 2.66%

Bullish

Bullish

Baltic Dry Index

3053, 9.51%

Bullish

Bullish

Euro

1.2020, -0.65%

Bearish

Bearish

Dollar/Yen

109.29, 1.27%

Bullish

Bullish

Dow Transports

15347, 1.41%

Bullish

Bullish

High Yield (Bond ETF)

109.21, 0.08%

Neutral

Neutral

US 10 year Bond Yield

1.63%, 4.03%

Bearish

Bearish

NYSE Summation Index

739, 7.59%

Bullish

Neutral

US Vix

18.61, 7.39%

Bearish

Bearish

Skew

146

Bearish

Bearish

20 DMA, S & P 500

4147, Above

Bullish

Neutral

50 DMA, S & P 500

4003, Above

Bullish

Neutral

200 DMA, S & P 500

3655, Above

Bullish

Neutral

20 DMA, Nifty

14618, Above

Neutral

Bullish

50 DMA, Nifty

14783, Below

Neutral

Bearish

200 DMA, Nifty

13057, Above

Neutral

Bullish

S & P 500 P/E

42.57

Bearish

Neutral

Nifty P/E

32.21

Neutral

Bearish

India Vix

23.03, 1.49%

Neutral

Bearish

Dollar/Rupee

74.06, -1.15%

Neutral

Bullish

 

 

Overall

 

 

S & P 500

 

 

Nifty

 

Bullish Indications

9

9

Bearish Indications

6

8

Outlook

Bullish

Bullish

Observation

The S and P was unchanged and the Nifty rallied last week. Indicators are bullish for the week.

The markets are about to begin a great depression style collapse. Watch those stops.

On the Horizon

US – Employment data, UK – BOE rate decision

*Nifty

India’s Benchmark Stock Market Index

Raw Data

Courtesy Stock charts, investing.com, multpl.com, NSE

**Neutral

Changes less than 0.5% are considered neutral

 


          The S & P 500 was little changed and the Nifty rallied last week. Indicators are bullish for the week. Earnings growth has been very good but it is in the price.The market is on the verge of an epic correction. Deflationary busts often begin after inflationary scares (the market is calling the Fed’s bluff) and gold is telegraphing just that. Corporate bonds are flashing early warning signs. The epic crash signal is alive and well with retail, hedge funds, and speculators all in, despite the recent melt-up and break out of the long-term broadening top, suggesting a major top is imminent. The moment of reckoning is very near.  Technicals are about to track fundamentals and turn bearish. The market is yet to price in one of the worst earnings decline periods in stock market history. With extremely high valuations, a crash is on the menu. Extremely low volatility suggests complacency and downside ahead.

We rallied 46% right after the great depressions (1930’s) first collapse and we have rallied over 80% in our most recent rally of the lows in the last 12 month period. After extreme euphoria for the indices, a highly probable selloff to the 3000 area is emerging on the S and P, and 10000 should arrive on the Nifty in the next few months. The FED is repeating the Japan experiment and the 3 lost decades in Japan (1989-2019) is set to repeat across the globe. SPX 1500 and lower in a year and we stay there till 2030, scary? The markets are very close to an epic meltdown and the SPX is headed way lower.

The markets are overvalued, overbought and out of touch with economic realities. Long term, the epic meltdown is set to continue resulting in a 5 year plus bear market with lot lower levels may be as low as 800 on the S and P. QE forever from the FED is about to trigger the deflationary collapse of the century as we make a major top in global equity markets. The market is looking like the short of a lifetime with topping action in the transports, other global indices, and commodities. High valuations continue.

The recent global virus epidemic (black swan) has dented global GDP significantly and will usher in a depression much faster than most think. The trend is about to change from bullish to bearish and the markets are about to get smashed by a rebounding dollar. Looking for significant underperformance in the Nifty going forward on rapidly deteriorating macros. A 5-year deflationary wave has started in key asset classes like the Euro, stocks, and commodities amidst several bearish divergences and overstretched valuations.

We are entering a multi-year great depression. 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 of late as interest rates are about to plunge yet again reflecting a major recession. The critical levels to watch for the week are 4195 (up) and 4170 (down) on the S & P 500 and 14700 (up) and 14550 (down) on the Nifty. A significant breach of the above levels could trigger the next big move in the above markets. The Nifty, Shanghai composite, dollar, and bonds are on Ichimoku daily sell signals while gold and the S & P 500 are on Ichimoku daily buy signals so some things got to give. High beta / P/E is about to get torched soon (despite the bullish consensus emerging). Gold will likely prove to be the best asset class the next 5 years. You can check out lastweek’s report for a comparison. Love your thoughts and feedback.

  

Sunday, 25 April 2021

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning April 26

 

Indicator

Weekly Level / Change

Implication for

S & P 500

Implication for Nifty*

S & P 500

4180, -0.13%

Neutral

Neutral

Nifty

14341, -1.89%

Neutral **

Bearish

China Shanghai Index

3474, 1.39%

Bullish

Bullish

Gold

1777, -0.13%

Neutral

Neutral

WTIC Crude

62.05, -1.71%

Bearish

Bearish

Copper

4.34, 4.15%

Bullish

Bullish

Baltic Dry Index

2788, 16.90%

Bullish

Bullish

Euro

1.2100, 0.98%

Bullish

Bullish

Dollar/Yen

107.88, -0.82%

Bearish

Bearish

Dow Transports

15133, 1.43%

Bullish

Bullish

High Yield (Bond ETF)

109.12, 0.11%

Neutral

Neutral

US 10 year Bond Yield

1.56%, -1.18%

Bullish

Bullish

NYSE Summation Index

687, -4.44%

Bearish

Neutral

US Vix

17.33, 6.65%

Bearish

Bearish

Skew

140

Bearish

Bearish

20 DMA, S and P 500

4095, Above

Bullish

Neutral

50 DMA, S and P 500

3976, Above

Bullish

Neutral

200 DMA, S and P 500

3630, Above

Bullish

Neutral

20 DMA, Nifty

14593, Below

Neutral

Bearish

50 DMA, Nifty

14825, Below

Neutral

Bearish

200 DMA, Nifty

12958, Above

Neutral

Bullish

S & P 500 P/E

42.56

Bearish

Neutral

Nifty P/E

32.07

Neutral

Bearish

India Vix

22.69, 11.21%

Neutral

Bearish

Dollar/Rupee

74.93, 0.54%

Neutral

Bearish

 

 

Overall

 

 

S & P 500

 

 

Nifty

 

Bullish Indications

9

7

Bearish Indications

6

10

Outlook

Bullish

Bearish

Observation

The S and P was unchanged and the Nifty fell last week. Indicators are mixed for the week.

The markets are about to begin a great depression style collapse. Watch those stops.

On the Horizon

US – FOMC rate decision, Eurozone – German GDP, German Employment data, CPI, Japan –BOJ rate decision

*Nifty

India’s Benchmark Stock Market Index

Raw Data

Courtesy Stock charts, investing.com, multpl.com, NSE

**Neutral

Changes less than 0.5% are considered neutral

 


          The S & P was little changed and the Nifty fell last week. Indicators are mixed for the week. The market is on the verge of an epic correction. Deflationary busts begin after inflation scares (the market is calling the Fed’s bluff) and gold is telegraphing just that. Corporate bonds are flashing early warning signs. The epic crash signal is alive and well with retail, hedge funds, and speculators all in, despite the recent melt-up and break out of the long-term broadening top, suggesting a major top is imminent. The moment of reckoning is very near.  Technicals are about to track fundamentals and turn bearish. The market is yet to price in one of the worst earnings decline periods in stock market history. With extremely high valuations, a crash is on the menu. Extremely low volatility suggests complacency and downside ahead.

We rallied 46% right after the great depressions (1930’s) first collapse and we have rallied over 80% in our most recent rally of the lows in the last 12 month period. After extreme euphoria for the indices, a highly probable selloff to the 3000 area is emerging on the S and P, and 10000 should arrive on the Nifty in the next few months. The FED is repeating the Japan experiment and the 3 lost decades in Japan (1989-2019) is set to repeat across the globe. SPX 1500 and lower in a year and we stay there till 2030, scary? The markets are very close to an epic meltdown and the SPX is headed way lower.

The markets are overvalued, overbought and out of touch with economic realities. Long term, the epic meltdown is set to continue resulting in a 5 year plus bear market with lot lower levels may be as low as 800 on the S and P. QE forever from the FED is about to trigger the deflationary collapse of the century as we make a major top in global equity markets. The market is looking like the short of a lifetime with topping action in the transports, other global indices, and commodities. High valuations continue.

The recent global virus epidemic (black swan) has dented global GDP significantly and will usher in a depression much faster than most think. The trend is about to change from bullish to bearish and the markets are about to get smashed by a rebounding dollar. Looking for significant underperformance in the Nifty going forward on rapidly deteriorating macros. A 5-year deflationary wave has started in key asset classes like the Euro, stocks, and commodities amidst several bearish divergences and overstretched valuations.

We are entering a multi-year great depression. 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 of late as interest rates are about to plunge yet again reflecting a major recession. The critical levels to watch for the week are 4190 (up) and 4170 (down) on the S & P 500 and 14400 (up) and 14250 (down) on the Nifty. A significant breach of the above levels could trigger the next big move in the above markets. The Nifty, Shanghai composite, gold, and bonds are on Ichimoku daily sell signals while the Dollar and S & P 500 are on Ichimoku daily buy signals so some things got to give. High beta / P/E is about to get torched soon (despite the bullish consensus emerging). Gold will likely prove to be the best asset class in the next 5 years. You can check out lastweek’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.