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Ahead of the Curve provides you with 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 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 includes areas of Capital Markets, Banking, Investment Analysis and Portfolio Management and has over 20 years of experience in the above areas covering the US and Indian Markets. He has several publications in the above areas. The views expressed here are his own and should not be construed as advice to buy or sell securities.

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Saturday, 10 February 2018

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning February 12

Indicator
Weekly Level / Change
Implication for
S & P 500
Implication for Nifty*
S & P 500
2620, -5.16%
Bearish
Bearish
Nifty
10455, -2.84%
Neutral **
Bearish
China Shanghai Index
3130, -9.60%
Bearish
Bearish
Gold
1316, -1.62%
Bearish
Bearish
WTIC Crude
59.20, -9.55%
Bearish
Bearish
Copper
3.03, -4.83%
Bearish
Bearish
Baltic Dry Index
1106, -0.72%
Bearish
Bearish
Euro
1.2252, -1.66%
Bearish
Bearish
Dollar/Yen
108.78, -1.26%
Bearish
Bearish
Dow Transports
10137, -5.15%
Bearish
Bearish
High Yield (ETF)
35.68, -1.63%
Bearish
Bearish
US 10 year Bond Yield
2.83%, -0.88%
Bullish
Bullish
Nyse Summation Index
-55, -114.29%
Bearish
Neutral
US Vix
29.06, 67.88%
Bearish
Bearish
Skew
129
Neutral
Neutral
20 DMA, S and P 500
2775, Below
Bearish
Neutral
50 DMA, S and P 500
2719, Below
Bearish
Neutral
200 DMA, S and P 500
2539, Above
Bullish
Neutral
20 DMA, Nifty
10824, Below
Neutral
Bearish
50 DMA, Nifty
10562, Below
Neutral
Bearish
200 DMA, Nifty
10047, Above
Neutral
Bullish
India Vix
19.23, 26.10%
Neutral
Bearish
Dollar/Rupee
64.23, 0.00%
Neutral
Neutral


Overall


S & P 500


Nifty

Bullish Indications
2
2
Bearish Indications
14
15
Outlook
Bearish
Bearish
Observation
The S and P 500 and the Nifty fell sharply last week. Indicators are bearish.
The markets have made important tops. Time to watch those stops.
On the Horizon
Japan – GDP, Australia – Employment data, Euro Zone – German GDP, CPI, UK – CPI, Retail sales, U.S – CPI, Retail sales, Oil inventories, PPI
*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 february 12

The S and P 500 and the Nifty fell sharply for the second week in a row. Signals are bearish for the upcoming week. Quantitative tightening by the FED is yet to be priced in fully and sentiment indicators are back in complacency mode. The markets are still trading well over 3 standard deviations above their long term averages from which corrections usually result. Divergences in high yield, transports and surging bond yields are flashing warning signs. An interest rate shock can’t be ruled out. Indian market volatility is only 70% of US market volatility so there is complacency and some catch up left on the down side. The critical levels to watch are 2630 (up) and 2610(down) on the S & P and 10550 (up) and 10350 (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 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.