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.

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Time Series Analysis with GRETL

This video shows key time-series analyses techniques such as ARIMA, Granger Causality, Co-integration, and VECM performed via GRETL. Key dia...

Monday, 18 December 2023

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning December 18

 

Asset Class

Weekly Level / Change

Implication for S & P 500

Implication for Nifty*

S & P 500

4719, 2.49%

Bullish

Bullish

Nifty

21457, 2.32%

Neutral **

Bullish

China Shanghai Index

2943, -0.91%

Bearish

Bearish

Gold

2034, 0.96%

Bullish

Bullish

WTIC Crude

71.79, 1.22%

Bullish

Bullish

Copper

3.88, 1.27%

Bullish

Bullish

CRB Index

265, 0.85%

Bullish

Bullish

Baltic Dry Index

2348, -5.44%

Bearish

Bearish

Euro

1.0894, 1.24%

Bullish

Bullish

Dollar/Yen

142.16, -1.91%

Bearish

Bearish

Dow Transports

16016, 5.29%

Bullish

Bullish

Corporate Bonds (ETF)

110.33, 2.77%

Bullish

Bullish

High Yield Bonds (ETF)

94.66, 1.99%

Bullish

Bullish

US 10-year Bond Yield

3.92%, -7.73%

Bullish

Bullish

NYSE Summation Index

746, 39%

Bullish

Neutral

US Vix

12.28, -0.57%

Bullish

Bullish

Skew

153

Bearish

Bearish

CNN Fear & Greed Index

Greed

Bearish

Bearish

20 DMA, S & P 500

4591, Above

Bullish

Neutral

50 DMA, S & P 500

4429, Above

Bullish

Neutral

200 DMA, S & P 500

4317, Above

Bullish

Neutral

20 DMA, Nifty

20441, Above

Neutral

Bullish

50 DMA, Nifty

19845, Above

Neutral

Bullish

200 DMA, Nifty

18963, Above

Neutral

Bullish

S & P 500 P/E

26.07

Bearish

Neutral

Nifty P/E

22.92

Neutral

Bearish

India Vix

13.13, 5.27%

Neutral

Bearish

Dollar/Rupee

83.06, -0.44%

Neutral

Neutral

 

 

Overall

 

 

S & P 500

 

 

Nifty

 

Bullish Indications

15

15

Bearish Indications

5

7

 

Outlook

Bullish

Bullish

Observation

 

The S&P 500 and the Nifty rallied last week. Indicators are bullish for the week.

Markets are at resistance. Watch those stops.

On the Horizon

US – GDP, Eurozone – CPI, UK – GDP, CPI

*Nifty

 

India’s Benchmark Stock Market Index

Raw Data

Courtesy Stock charts, investing.com, multpl.com, NSE

**Neutral

Changes less than 0.5% are considered neutral

 


The S&P 500 and the Nifty rallied last week. Indicators are bullish for the week. Markets are at resistance, as we enter bullish seasonality. We are transitioning from an inflationary regime to a deflationary collapse. The Nifty has caught up to the upside. We are way overbought short-term and will likely pull back here.

The past week saw US equity markets rally. Most emerging markets rose, as interest rates fell. Transports led up. The Baltic dry fell. The dollar fell. Commodities rose. Valuations continue to be quite expensive, market breadth improved, and the sentiment is now exuberant. Fear abated this week, as a possible reality check from a FED Pivot looms.

After this rally, the recent currency crisis should resume and push risky assets to new lows across the board. Deflation is in the air despite the recent inflationary spike and bonds are telegraphing just that. Feels like a 2008-style recession trade has begun, with a potential for a decline in risk assets across the board. The current market is tracking closely the 2000 moves down in the S&P 500, implying a panic low right ahead in the upcoming months (My views do not matter, kindly pay attention to the levels). A dollar rebound from major support is a likely catalyst.

The S&P 500 is encountering resistance near its recent highs. We have bounced from recent lows without capitulation. This suggests the lows may not be in and the regime has changed from buying the dip to selling the rip. We may get a final flush down soon. Risky assets should continue breaking to the downside across the board, as downward earnings revisions are underway.

The Fed has aggressively tightened into a recession. Deflationary busts often begin after major inflationary scares. The market has rebounded after correcting significantly, and more is left on the downside. The Dollar, commodities, and bond yields are continuing to flash major warning signs.

The epic correction signal occurred with retail, hedge funds, and speculators all in, in January 2022, suggesting a major top is in. The moment of reckoning is here. With extremely high valuations, a crash is on the menu. Low volatility suggests complacency and downside ahead.

Global yield curves have inverted significantly reflecting a major upcoming recessionThe recent steepening of the yield curve, within an inverted context, with rates falling, is a precursor to the next recession, and the riskiest assets will underperform going forward under such conditions. 

The critical levels to watch for the week are 4730 (up) and 4705 (down) on the S&P 500 and 21550 (up) and 21350 (down) on the Nifty. A significant breach of the above levels could trigger the next big move in the above markets.  High beta / P/E will get torched yet again and will likely prove to be a sell on every rise. Gold is increasingly looking like the asset class to own over the next decade. (Gold exploded almost 8 times higher over the decade following the dot-com bust in 2000, just imagine what would happen when this AI bubble bursts? following the recent crypto bubble burst) You can check out last week’s report for a comparison. Love your thoughts and feedback.

 

Monday, 11 December 2023

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning December 11

 

Asset Class

Weekly Level / Change

Implication for S & P 500

Implication for Nifty*

S & P 500

4604, 0.21%

Neutral

Neutral

Nifty

20969, 3.46%

Neutral **

Bullish

China Shanghai Index

2970, -2.05%

Bearish

Bearish

Gold

2021, -2.42%

Bearish

Bearish

WTIC Crude

71.26, -3.79%

Bearish

Bearish

Copper

3.83, -2.48%

Bearish

Bearish

CRB Index

263, -2.94%

Bearish

Bearish

Baltic Dry Index

2483, -22.21%

Bearish

Bearish

Euro

1.0764, -1.08%

Bearish

Bearish

Dollar/Yen

144.95, -1.27%

Bearish

Bearish

Dow Transports

15211, -1.63%

Bearish

Bearish

Corporate Bonds (ETF)

107.35, 0.17%

Neutral

Neutral

High Yield Bonds (ETF)

92.80, -0.15%

Neutral

Neutral

US 10-year Bond Yield

4.23%, 0.48%

Neutral

Neutral

NYSE Summation Index

535, 62%

Bullish

Neutral

US Vix

12.35, -2.22%

Bullish

Bullish

Skew

134

Neutral

Neutral

CNN Fear & Greed Index

Greed

Bearish

Bearish

20 DMA, S & P 500

4537, Above

Bullish

Neutral

50 DMA, S & P 500

4387, Above

Bullish

Neutral

200 DMA, S & P 500

4300, Above

Bullish

Neutral

20 DMA, Nifty

20053, Above

Neutral

Bullish

50 DMA, Nifty

19697, Above

Neutral

Bullish

200 DMA, Nifty

18884, Above

Neutral

Bullish

S & P 500 P/E

25.44

Bearish

Neutral

Nifty P/E

22.41

Neutral

Bearish

India Vix

12.47, 0.71%

Neutral

Bearish

Dollar/Rupee

83.44, 0.22%

Neutral

Neutral

 

 

Overall

 

 

S & P 500

 

 

Nifty

 

Bullish Indications

5

5

Bearish Indications

11

12

 

Outlook

Bearish

Bearish

Observation

 

The S&P 500 was unchanged and the Nifty rallied last week. Indicators are bearish for the week.

Markets are at resistance. Watch those stops.

On the Horizon

US – CPI, PPI, FOMC rate decision, Eurozone – ECB rate decision, UK – GDP, BOE rate decision

*Nifty

 

India’s Benchmark Stock Market Index

Raw Data

Courtesy Stock charts, investing.com, multpl.com, NSE

**Neutral

Changes less than 0.5% are considered neutral

 


The S&P 500 was unchanged and the Nifty rallied last week. Indicators are bearish for the week. Markets are at resistance, as we enter bullish seasonality. We are transitioning from an inflationary regime to a deflationary collapse. The Nifty has caught up to the upside. We are way overbought short-term and will likely pull back here.

The past week saw US equity markets unchanged. Most emerging markets fell, as interest rates were little changed. Transports fell. The Baltic dry fell. The dollar rose. Commodities were down. Valuations continue to be quite expensive, market breadth improved, and the sentiment is now exuberant. Fear abated this week, as a possible reality check from a FED Pivot looms.

After this rally, the recent currency crisis should resume and push risky assets to new lows across the board. Deflation is in the air despite the recent inflationary spike and bonds are telegraphing just that. Feels like a 2008-style recession trade has begun, with a potential for a decline in risk assets across the board. The current market is tracking closely the 2000 moves down in the S&P 500, implying a panic low right ahead in the upcoming months (My views do not matter, kindly pay attention to the levels). A dollar rebound from major support is a likely catalyst.

The S&P 500 is encountering resistance near its recent highs. We have bounced from recent lows without capitulation. This suggests the lows may not be in and the regime has changed from buying the dip to selling the rip. We may get a final flush down soon. Risky assets should continue breaking to the downside across the board, as downward earnings revisions are underway.

The Fed has aggressively tightened into a recession. Deflationary busts often begin after major inflationary scares. The market has rebounded after correcting significantly, and more is left on the downside. The Dollar, commodities, and bond yields are continuing to flash major warning signs.

The epic correction signal occurred with retail, hedge funds, and speculators all in, in January 2022, suggesting a major top is in. The moment of reckoning is here. With extremely high valuations, a crash is on the menu. Low volatility suggests complacency and downside ahead.

Global yield curves have inverted significantly reflecting a major upcoming recessionThe recent steepening of the yield curve, within an inverted context, with rates falling, is a precursor to the next recession, and the riskiest assets will underperform going forward under such conditions. Looking for significant underperformance in the Nifty going forward on challenging macros.

The critical levels to watch for the week are 4615 (up) and 4590 (down) on the S&P 500 and 21050 (up) and 20900 (down) on the Nifty. A significant breach of the above levels could trigger the next big move in the above markets.  High beta / P/E will get torched yet again and will likely prove to be a sell on every rise. Gold is increasingly looking like the asset class to own over the next decade. (Gold exploded almost 8 times higher over the decade following the dot-com bust in 2000, just imagine what would happen when this AI bubble bursts? following the recent crypto bubble burst) 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.