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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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Is a Recession Imminent?

Definition of a Recession: The textbook definition of a recession is two quarters of negative GDP growth. Some examples of recessions in...

Sunday, 5 April 2020

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning April 06

Indicator
Weekly Level / Change
Implication for
S & P 500
Implication for Nifty*
S & P 500
2489, -2.08%
Bearish
Bearish
Nifty
8084, -6.66%
Neutral **
Bearish
China Shanghai Index
2764, -0.30%
Neutral
Neutral
Gold
1649, -0.32%
Neutral
Neutral
WTIC Crude
28.97, 34.68%
Bullish
Bullish
Copper
2.18, 0.97%
Bullish
Bullish
Baltic Dry Index
616, 10.79%
Bullish
Bullish
Euro
1.0805, -3.02%
Bearish
Bearish
Dollar/Yen
108.47, 0.52%
Bullish
Bullish
Dow Transports
7305, -5.12%
Bearish
Bearish
High Yield (Bond)
90.54, -4.07%
Bearish
Bearish
US 10 year Bond Yield
0.60%, -9.95%
Bullish
Bullish
Nyse Summation Index
-1038, 7.32%
Bullish
Neutral
US Vix
46.80, -28.59%
Bullish
Bullish
Skew
121
Neutral
Neutral
20 DMA, S and P 500
2531, Below
Bearish
Neutral
50 DMA, S and P 500
2954, Below
Bearish
Neutral
200 DMA, S and P 500
3021, Below
Bearish
Neutral
20 DMA, Nifty
9030, Below
Neutral
Bearish
50 DMA, Nifty
10763, Below
Neutral
Bearish
200 DMA, Nifty
11411, Below
Neutral
Bearish
S & P 500 P/E
18.73
Neutral
Neutral
Nifty P/E
18.22
Neutral
Neutral
India Vix
55.30, -21.43%
Neutral
Bullish
Dollar/Rupee
76.24, 1.02%
Neutral
Bearish


Overall


S & P 500


Nifty

Bullish Indications
7
7
Bearish Indications
7
9
Outlook
Neutral
Bearish
Observation
The S and P 500 and the Nifty fell last week. Indicators are mixed for the week.
The markets have begun a great depression style collapse. Watch those stops.
On the Horizon
US – CPI, UK – GDP
*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


stock market signals april 06


The S and P and the Nifty fell last week. Indicators are mixed for the coming week. The rally in the S & P is over and it is going to crash to 1800 soon. Long term, the epic meltdown is set to continue resulting in a 5 year plus bear market with lot lower levels maybe as low as 800 on the S and P. QE forever from the FED is about to trigger the deflationary collapse of the century and we have made a major top in global equity markets. The market is looking like the short of a life time with non-conformations from the transports, other global indices and commodities. High valuations continue. The breakdown in Crude and the Euro was a precursor to a massive drop in the S and P 500. The recent global virus epidemic (black swan) is likely to dent global GDP significantly and usher in a depression much faster than most think. The trend has changed from bullish to bearish and the markets are getting smashed by a strong dollar. Looking for significant under performance 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 a number of bearish divergences and over stretched valuations. We are on the verge of 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 off late as the yield curve inverts into a recession. The critical levels to watch for the week are 2500 (up) and 2475 (down) on the S & P 500 and 8150 (up) and 8000 (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.


Sunday, 29 March 2020

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

Indicator
Weekly Level / Change
Implication for
S & P 500
Implication for Nifty*
S & P 500
2542, 10.26%
Bullish
Bullish
Nifty
8660, -0.97%
Neutral **
Bearish
China Shanghai Index
2772, 0.97%
Bullish
Bullish
Gold
1631, 9.83%
Bullish
Bullish
WTIC Crude
21.84, -2.63%
Bearish
Bearish
Copper
2.17, 0.02%
Neutral
Neutral
Baltic Dry Index
556, -11.04%
Bearish
Bearish
Euro
1.1143, 4.19%
Bullish
Bullish
Dollar/Yen
107.94, -2.59%
Bearish
Bearish
Dow Transports
7699, 12.60%
Bullish
Bullish
High Yield (Bond)
94.38, 9.57%
Bullish
Bullish
US 10 year Bond Yield
0.68%, -14.74%
Bullish
Bullish
Nyse Summation Index
-1120, 5.32%
Bullish
Neutral
US Vix
65.54, -0.70%
Bullish
Bullish
Skew
117
Neutral
Neutral
20 DMA, S and P 500
2657, Below
Bearish
Neutral
50 DMA, S and P 500
3033, Below
Bearish
Neutral
200 DMA, S and P 500
3030, Below
Bearish
Neutral
20 DMA, Nifty
9613, Below
Neutral
Bearish
50 DMA, Nifty
11081, Below
Neutral
Bearish
200 DMA, Nifty
11483, Below
Neutral
Bearish
S & P 500 P/E
19.12
Neutral
Neutral
Nifty P/E
19.52
Neutral
Neutral
India Vix
70.39, 4.90%
Neutral
Bearish
Dollar/Rupee
75.48, 0.10%
Neutral
Neutral


Overall


S & P 500


Nifty

Bullish Indications
9
8
Bearish Indications
6
8
Outlook
Bullish
Neutral
Observation
The S and P 500 was up and the Nifty fell last week. Indicators are mixed for the week.
The markets have begun a great depression style collapse. Watch those stops.
On the Horizon
US – Employment data, UK – GDP, Eurozone – German employment data, CPI, India – RBI 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


stock market signals march 30


The S and P rebounded and the Nifty fell last week. Indicators are mixed for the coming week. The rally in the S & P is likely to extend to 2740 following which it could crash to 1800. Long term, the epic meltdown is set to continue resulting in a 5 year plus bear market. QE forever from the FED is about to trigger the deflationary collapse of the century and we have made a major top in global equity markets. The market is looking like the short of a life time with non-conformations from the transports, other global indices and commodities. Insane valuations continue. The breakdown in Crude and the Euro was a precursor to a massive drop in the S and P 500. The recent global virus epidemic (black swan) is likely to dent global GDP significantly and usher in a recession much faster than most think. The trend has changed from bullish to bearish and the markets are getting smashed by a strong dollar. Looking for significant under performance 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. 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 off late as the yield curve inverts into a recession. The critical levels to watch for the week are 2555 (up) and 2530 (down) on the S & P 500 and 8750 (up) and 8600 (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.