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.

Sunday 26 March 2017

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning March 27

Indicator	Weekly Level / Change	Implication for S & P 500	Implication for Nifty*
S & P 500	2344, -1.44%	Bearish	Bearish
Nifty	9108, -0.57%	Neutral **	Bearish
China Shanghai Index	3269, 0.99%	Bullish	Bullish
Gold	1249, 1.49%	Bullish	Bullish
WTIC Crude	47.97, -2.72%	Bearish	Bearish
Copper	2.63, -2.25%	Bearish	Bearish
Baltic Dry Index	1240, 5.80%	Bullish	Bullish
Euro	1.080, 0. 70%	Bullish	Bullish
Dollar/Yen	111.27, -1.27%	Bearish	Bearish
Dow Transports	8929, -2.37%	Bearish	Bearish
High Yield (ETF)	36.54, -0.25%	Neutral	Neutral
US 10 year Bond Yield	2.40%, -4.04%	Bullish	Bullish
Nyse Summation Index	223, -30.55%	Bearish	Neutral
US Vix	12.96, 14.89%	Bearish	Bearish
Skew	137	Neutral	Neutral
20 DMA, S and P 500	2369, Below	Bearish	Neutral
50 DMA, S and P 500	2330, Above	Bullish	Neutral
200 DMA, S and P 500	2208, Above	Bullish	Neutral
20 DMA, Nifty	9007, Above	Neutral	Bullish
50 DMA, Nifty	8787, Above	Neutral	Bullish
200 DMA, Nifty	8522, Above	Neutral	Bullish
India Vix	11.98, 1.05%	Neutral	Bearish
Dollar/Rupee	65.38, -0.18%	Neutral	Neutral
Overall	S & P 500	Nifty
Bullish Indications	7	8
Bearish Indications	8	8
Outlook	Bearish	Neutral
Observation	The S and P 500 and the Nifty fell last week. Indicators are mixed. The market is beginning a break down. Time to watch those stops.
On the Horizon	China – PMI, Japan - CPI, Euro zone – German and Euro CPI, German employment data, U.S – Trade balance, Consumer confidence, Janet Yellen Speech, GDP, Canada - 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

The S and P 500 and the Nifty fell last week. Signals are mixed for the upcoming week. Past and future FED rate hikes are yet to be priced in and sentiment indicators are back in complacent mode. Market internals, transports and commodities are flashing major warning signs of a large decline ahead. The critical levels to watch are 2360 (up) and 2330 (down) on the S & P and 9200 (up) and 9000 (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.