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, 8 April 2018

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning April 09

Indicator	Weekly Level / Change	Implication for S & P 500	Implication for Nifty*
S & P 500	2605, -1.38%	Bearish	Bearish
Nifty	10332, 2.15%	Neutral **	Bullish
China Shanghai Index	3131, -0.93%	Bearish	Bearish
Gold	1336, 0.66%	Bullish	Bullish
WTIC Crude	62.06, -4.43%	Bearish	Bearish
Copper	3.06, 1.09%	Bullish	Bullish
Baltic Dry Index	953, -11.76%	Bearish	Bearish
Euro	1.2293, -0.12%	Neutral	Neutral
Dollar/Yen	106.91, 0.47%	Neutral	Neutral
Dow Transports	10146, -2.41%	Bearish	Bearish
High Yield (ETF)	35.74, 0.11%	Neutral	Neutral
US 10 year Bond Yield	2.78%, 1.24%	Bearish	Bearish
Nyse Summation Index	31, 100.91%	Bullish	Neutral
US Vix	21.49, 7.61%	Bearish	Bearish
Skew	122	Neutral	Neutral
20 DMA, S and P 500	2679, Below	Bearish	Neutral
50 DMA, S and P 500	2710, Below	Bearish	Neutral
200 DMA, S and P 500	2594, Above	Bullish	Neutral
20 DMA, Nifty	10222, Below	Neutral	Bearish
50 DMA, Nifty	10464, Below	Neutral	Bearish
200 DMA, Nifty	10195, Above	Neutral	Bullish
India Vix	14.75, -6.41%	Neutral	Bullish
Dollar/Rupee	64.89, -0.21%	Neutral	Neutral
Overall	S & P 500	Nifty
Bullish Indications	4	4
Bearish Indications	9	9
Outlook	Bearish	Bearish
Observation	The S and P 500 fell and the Nifty rallied last week. Indicators are bearish. The markets have made important tops. Time to watch those stops.
On the Horizon	Euro Zone – ECB monetary policy minutes, U.S – PPI, CPI, Oil inventories, FOMC minutes

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

The S and P 500 fell and the Nifty rallied last week. Indicators are bearish for the upcoming week. Quantitative tightening by the FED is yet to be priced in fully. The markets are still trading well over 3 standard deviations above their long term averages from which corrections usually result. The yen and other safe haven asset classes are flashing warning signs. Indian market volatility is still well below US market volatility as the nifty is close to resistance while the US market is at major support so there is complacency and some catch up left on the down side in India. The critical levels to watch are 2615 (up) and 2590 (down) on the S & P and 10400 (up) and 10250 (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.