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, 29 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 30

Indicator	Weekly Level / Change	Implication for S & P 500	Implication for Nifty*
S & P 500	2670, -0.01%	Neutral	Neutral
Nifty	10692, 1.21%	Neutral **	Bullish
China Shanghai Index	3082, 0.35%	Neutral	Neutral
Gold	1323, -1.11%	Bearish	Bearish
WTIC Crude	68.10, -0.44%	Neutral	Neutral
Copper	3.05, -2.84%	Bearish	Bearish
Baltic Dry Index	1374, 14.49%	Bullish	Bullish
Euro	1.2136, -1.37%	Bearish	Bearish
Dollar/Yen	109.09, 1.38%	Bullish	Bullish
Dow Transports	10549, -0.28%	Neutral	Neutral
High Yield (ETF)	35.87, -0.33%	Neutral	Neutral
US 10 year Bond Yield	2.96%, 0.20%	Neutral	Neutral
Nyse Summation Index	205, -21.74%	Bearish	Neutral
US Vix	15.41, -8.71%	Bullish	Bullish
Skew	128	Neutral	Neutral
20 DMA, S and P 500	2654, Above	Bullish	Neutral
50 DMA, S and P 500	2688, Below	Bearish	Neutral
200 DMA, S and P 500	2611, Above	Bullish	Neutral
20 DMA, Nifty	10460, Above	Neutral	Bullish
50 DMA, Nifty	10375, Above	Neutral	Bullish
200 DMA, Nifty	10266, Above	Neutral	Bullish
India Vix	12.02, -7.11%	Neutral	Bullish
Dollar/Rupee	66.51, 0.47%	Neutral	Neutral
Overall	S & P 500	Nifty
Bullish Indications	5	8
Bearish Indications	5	3
Outlook	Neutral	Bullish
Observation	The S and P 500 was unchanged and the Nifty rallied last week. Indicators are mixed. The markets have made important tops. Time to watch those stops.
On the Horizon	Australia – RBA rate decision, China – PMI, UK- PMI’s, U.S – Home sales, ISM PMI’s, Oil inventories, FOMC rate decision, Employment data, Canada – Poloz speech, PMI

*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

Chart courtesy David Rosenberg

The S and P 500 was unchanged and the Nifty rallied last week. Indicators are mixed for the upcoming week. The markets are gearing for a really big directional move likely post the FED next 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. Indian market volatility is still well below US market volatility as the nifty is close to resistance while the US market has hit resistance and turned down. The critical levels to watch are 2680 (up) and 2660 (down) on the S & P and 10750 (up) and 10600 (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.

No comments:

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.