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.

Tuesday, 23 June 2015

The Very Scary Rising Wedge on the US Stock Market S and P 500 Index

This is a chart originally highlighted on Stocktwits.com, the rising wedge on the S and P 500 with eerie parallels to 2000 and 2008. What is worth noting here is the current rising wedge is much bigger than that observed in 2000 or 2008. The consequences could be severe as and when the break occurs and could trigger a major bear market:

Saturday, 20 June 2015

Stock Market Signals for the US and Indian Stock Markets for the Upcoming Week beginning June 22

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Indicator	Weekly Level / Change / Significance	Implication for S & P 500	Implication for Nifty*
S & P 500	2110, 0.76%	Bullish	Bullish
Nifty	8225, 3.03%	Neutral**	Bullish
China Shanghai Index	4478, -13.32%	Bearish	Bearish
Gold	1200, 1.63%	Bullish	Bullish
WTIC Crude	59.69, -0.42%	Neutral	Neutral
Copper	2.57, -3.83%	Bearish	Bearish
Baltic Dry Index	779, 21.34%	Bullish	Bullish
Euro	1.1365, 0.94%	Bullish	Bullish
Dollar/Yen	122.70, -0.95%	Bearish	Bearish
Dow Transports	8412,- 0.06%	Neutral	Neutral
US 10 year Bond Yield	2.27%, -4.95%	Bullish	Bullish
Nyse Summation Index	-199, -33%	Bearish	Neutral
US Vix	13.96, 1.31%	Bearish	Bearish
20 DMA, S and P 500	2104, Above	Bullish	Neutral
50 DMA, S and P 500	2106, Above	Bullish	Neutral
200 DMA, S and P 500	2050, Above	Bullish	Neutral
20 DMA, Nifty	8177, Above	Neutral	Bullish
50 DMA, Nifty	8302, Below	Neutral	Bearish
200 DMA, Nifty	8352, Below	Neutral	Bearish
India Vix	15.09, -13.69%	Neutral	Bullish
Dollar/Rupee	63.47, -0.98%	Neutral	Bullish

Overall	S & P 500	Nifty
Bullish Indications	8	9
Bearish Indications	5	6
Outlook	Bullish	Bullish
Observation	The Sand P 500 rallied as expected last week while the Nifty outperformed significantly. The Vix is flashing warning signs. Market cycles are positive till July so a rally is likely next week.
On the Horizon	Greece negotiations, US, French and Italy Quarterly GDP, Japan CPI

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

Signals are bullish for the upcoming week. You can check out last weeks report for a comparison.

Tuesday, 16 June 2015

Trading Strategies for Fed Day and Beyond

The Fed's first rate hike is still far away. Several key asset classes could head lower post the #Fed despite the FOMC affirming a dovish outlook. Markets have been breaking down recently and the bearish trend could resume post the #FOMC. Let us look at some key markets:

S& P 500

Current: 1958

Support:

Recent Lows – 1867

Resistance:

Recent Highs - 2021

The 50 Day Moving Average (DMA) – 2041

Outlook: Bearish

Long: 1950 Put

Hedge : 1980 Call

Euro:

Current: 1.130

Support:

50 Day Moving Average (DMA) – 1.1108

Resistance:

50 Day Weekly Moving Average (DMA) – 1.1464

Outlook: Bearish

Long: 1.12 Put

Hedge : 1.14 Call

Gold ETF GLD:

Current: 109.21

Support:

50 DMA – 107.29

Resistance:

20 WMA – 110.44

Outlook: Bullish

Long: 110 Call

Hedge : 108 Put

Oil ETF USO:

Current: 14.62

Support:
20 DMA - 14.48

Resistance :

50 DMA – 15.24
20 WMA - 17.43

Outlook: Bearish

Long: 14.5 Put

Hedge : 15.5 Call

Nifty:

Current: 7981

Support:

Monthly lows – 7553

Resistance:

Recent Highs – 8091

Outlook: Bearish

Long: 7800 Put

Hedge : 8100 Call

Trading Strategies for Fed Day and Beyond http://t.co/eYo9u5bwMJ pic.twitter.com/K9VVPiBl5o
— samuelR (@RajveerRawlin) September 17, 2015

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.