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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.

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Sunday, 22 January 2017

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning January 23

Indicator
Weekly Level / Change
Implication for
S & P 500
Implication for Nifty*
S & P 500
2271, -0.15%
Neutral
Neutral
Nifty
8349, -0.61%
Neutral**
Bearish
China Shanghai Index
3123, 0.33%
Neutral
Neutral
Gold
1205, 0.73%
Bullish
Bullish
WTIC Crude
53.22, 1.62%
Bullish
Bullish
Copper
2.62, -2.42%
Bearish
Bearish
Baltic Dry Index
925, 1.65%
Bullish
Bullish
Euro
1.070, 0.55%
Bullish
Bullish
Dollar/Yen
114.52, 0.02%
Neutral
Neutral
Dow Transports
9225, 0.24%
Neutral
Neutral
High Yield (ETF)
36.75, -0.08%
Neutral
Neutral
US 10 year Bond Yield
2.47%, 3.66%
Bearish
Bearish
Nyse Summation Index
628, -2.58%
Bearish
Neutral
US Vix
11.54, 2.76%
Bearish
Bearish
20 DMA, S and P 500
2265, Above
Bullish
Neutral
50 DMA, S and P 500
2233, Above
Bullish
Neutral
200 DMA, S and P 500
2150, Above
Bullish
Neutral
20 DMA, Nifty
8254, Above
Neutral
Bullish
50 DMA, Nifty
8170, Above
Neutral
Bullish
200 DMA, Nifty
8310, Above
Neutral
Bullish
India Vix
15.79, 9.79%
Neutral
Bearish
Dollar/Rupee
68.09, -0.08%
Neutral
Neutral


Overall


S & P 500


Nifty

Bullish Indications
7

7
Bearish Indications
4
5
Outlook
Bullish
Bullish
Observation
The S and P 500 was unchanged and the Nifty fell last week. Indicators are bullish.
The Trump bounce is largely over. Time to watch those stops.
On the Horizon
Australia – CPI, New Zealand – CPI, Japan – CPI,
U.K – GDP,
US – Durable Goods, Trade balance, GDP
*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

stock market signals january 23


The S and P 500 was unchanged and the Nifty fell last week. Signals are bullish for the upcoming week. Possible FED rate hikes are yet to be priced in and sentiment indicators are back in complacent mode. Bond yields are surging back up. The critical levels to watch are 2280 (up) and 2260 (down) on the S & P and 8400 (up) and 8300 (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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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.