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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 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 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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Sunday 17 April 2016

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

Indicator
Weekly Level / Change
Implication for
S & P 500
Implication for Nifty*
S & P 500
2081, 1.62%
Bullish
Bullish
Nifty
7850, 3.91%
Neutral**
Bullish
China Shanghai Index
3078, 3.12%
Bullish
Bullish
Gold
1236, -0.35%
Neutral
Neutral
WTIC Crude
41.75, 5.27%
Bullish
Bullish
Copper
2.15, 3.26%
Bullish
Bullish
Baltic Dry Index
635, 17.81%
Bullish
Bullish
Euro
1.126, -1.15%
Bearish
Bearish
Dollar/Yen
108.66, 0.55%
Bullish
Bullish
Dow Transports
7978, 3.13%
Bullish
Bullish
High Yield (ETF)
34.56, 1.23%
Bullish
Bullish
US 10 year Bond Yield
1.75%, 1.86%
Bearish
Bearish
Nyse Summation Index
1020, 8.46%
Bullish
Neutral
US Vix
13.62, -11.33%
Bullish
Bullish
20 DMA, S and P 500
2056, Above
Bullish
Neutral
50 DMA, S and P 500
1990, Above
Bullish
Neutral
200 DMA, S and P 500
2014, Above
Bullish
Neutral
20 DMA, Nifty
7646, Above
Neutral
Bullish
50 DMA, Nifty
7424, Above
Neutral
Bullish
200 DMA, Nifty
7873, Below
Neutral
Bearish
India Vix
16.03, -2.42%
Neutral
Bullish
Dollar/Rupee
66.61, 0.10%
Neutral
Neutral


Overall


S & P 500


Nifty

Bullish Indications
14

13
Bearish Indications
2
3
Outlook
Bullish
Bullish
Observation
The Sand P 500 and the Nifty rallied last week. Indicators are bullish.
Markets are back at resistance. Time to tighten those stops as downside may resume any moment.
On the Horizon
New Zealand – CPI, Euro Zone – ZEW Survey, Rate decision, Canada – CPI
*Nifty
India’s Benchmark Stock Market Index
Raw Data
Courtesy Google finance, Stock charts, FXCM
**Neutral
Changes less than 0.5% are considered neutral


The US market and the Nifty rallied last week. Signals are bullish for the upcoming week. The Vix is suggesting complacency. The Yen is suggesting that global risk appetite is waning significantly. The markets are back at resistance and are likely to continue major breakdowns in 2016 as the recent rally is about to conclude. A big move is imminent.  The critical levels to watch are 2090 (up) and 2070 (down) on the S & P and 7900 (up) and 7800 (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. You can also check out snapshots of the S and P 500 and Nifty Indices. Love your thoughts and feedback.

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Cash - 40%
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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.