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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, 6 August 2017

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning August 07


Indicator
Weekly Level / Change
Implication for
S & P 500
Implication for Nifty*
S & P 500
2477, 0.19%
Neutral
Neutral
Nifty
10066, 0.52%
Neutral **
Bullish
China Shanghai Index
3262, 0.27%
Neutral
Neutral
Gold
1265, -0.84%
Bearish
Bearish
WTIC Crude
49.58, -0.26%
Neutral
Neutral
Copper
2.88, 0.35%
Neutral
Neutral
Baltic Dry Index
1023, 8.60%
Bullish
Bullish
Euro
1.1774, 0.19%
Neutral
Neutral
Dollar/Yen
110.67, -0.01%
Neutral
Neutral
Dow Transports
9278, 0.55%
Bullish
Bullish
High Yield (ETF)
37.22, -0.07%
Neutral
Neutral
US 10 year Bond Yield
2.27%, -0.96%
Bullish
Bullish
Nyse Summation Index
712, -5.21%
Bearish
Neutral
US Vix
10.03, -2.53%
Bullish
Bullish
Skew
140
Neutral
Neutral
20 DMA, S and P 500
2464, Above
Bullish
Neutral
50 DMA, S and P 500
2444, Above
Bullish
Neutral
200 DMA, S and P 500
2331, Above
Bullish
Neutral
20 DMA, Nifty
9946, Above
Neutral
Bullish
50 DMA, Nifty
9746, Above
Neutral
Bullish
200 DMA, Nifty
8974, Above
Neutral
Bullish
India Vix
11.39, 2.27%
Neutral
Bearish
Dollar/Rupee
63.75, -0.55%
Neutral
Bullish


Overall


S & P 500


Nifty

Bullish Indications
7

9
Bearish Indications
2
2
Outlook
Bullish
Bullish
Observation
The S and P 500 and the Nifty are close to new highs. Indicators are bullish.
The market is topping. Time to tighten those stops.

On the Horizon
UK – Manufacturing production data, New Zealand – Rate decision, U.S –Oil inventories, PPI, CPI





*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



stock market signals august 07

The S and P 500 and the Nifty are close to new highs. Signals are bullish for the upcoming week. Past and future FED rate hikes are yet to be priced in and sentiment indicators are back in complacency mode. Transports and the Yen are flashing warning signs. Momentum is waning. The critical levels to watch are 2485 (up) and 2465 (down) on the S & P and 10100 (up) and 10000 (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.