About

Ahead of the Curve provides 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 include capital markets, banking, investment analysis, and portfolio management, and he has over 20 years of experience in the above areas, covering the US and Indian markets. He has several publications in the above areas. He currently teaches business and management students at CHRIST University. The views expressed here are his own and should not be construed as advice to buy or sell securities.

Sunday, 10 April 2016

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

Indicator	Weekly Level / Change	Implication for S & P 500	Implication for Nifty*
S & P 500	2048, -1.21%	Bearish	Bearish
Nifty	7555, -2.05%	Neutral**	Bearish
China Shanghai Index	2985, -0.82%	Bearish	Bearish
Gold	1240, 1.35%	Bullish	Bullish
WTIC Crude	39.66, 8.27%	Bullish	Bullish
Copper	2.09, -3.83%	Bearish	Bearish
Baltic Dry Index	539, 19.78%	Bullish	Bullish
Euro	1.138, 0.19%	Neutral	Neutral
Dollar/Yen	108.09, -3.16%	Bearish	Bearish
Dow Transports	7736, -1.92%	Bearish	Bearish
High Yield (ETF)	34.14, 0.00%	Neutral	Neutral
US 10 year Bond Yield	1.72%, -4.02%	Bullish	Bullish
Nyse Summation Index	941, -12.54%	Bearish	Neutral
US Vix	15.36, 17.25%	Bearish	Bearish
20 DMA, S and P 500	2045, Above	Bullish	Neutral
50 DMA, S and P 500	1975, Above	Bullish	Neutral
200 DMA, S and P 500	2014, Above	Bullish	Neutral
20 DMA, Nifty	7611, Below	Neutral	Bearish
50 DMA, Nifty	7408, Above	Neutral	Bullish
200 DMA, Nifty	7882, Below	Neutral	Bearish
India Vix	16.43, -4.89%	Neutral	Bullish
Dollar/Rupee	66.54, 0.47%	Neutral	Neutral
Overall	S & P 500	Nifty
Bullish Indications	7	6
Bearish Indications	7	9
Outlook	Neutral	Bearish
Observation	The Sand P 500 and the Nifty sold off last week. Indicators are mixed. Markets are back at resistance. Time to tighten those stops as downside has resumed.
On the Horizon	China - Financing & Loan data, CPI, GDP, Australia – Employment data, U.K – CPI, Rate decision, U.S –Retail sales, CPI, Consumer confidence, Canada – Rate decision

*Nifty	India’s Benchmark Stock Market Index
Raw Data	Courtesy Google finance, Stock charts, FXCM
**Neutral	Changes less than 0.5% are considered neutral

The US market and the Nifty fell hard last week. Signals are mixed for the upcoming week. Transports are diverging and the Vix is suggesting complacency. The Yen is suggesting that global risk appetite is waning significantly. The markets are back at resistance and are likely to continue major breakdowns in 2016 as the recent rally has concluded. A big move is imminent. The critical levels to watch are 2060 (up) and 2040 (down) on the S & P and 7650 (up) and 7450 (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. You can also check out snapshots of the S and P 500 and Nifty Indices. 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.