About

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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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...

Saturday 2 December 2017

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning December 04

Indicator
Weekly Level / Change
Implication for
S & P 500
Implication for Nifty*
S & P 500
2642, 1.53%
Bullish
Bullish
Nifty
10122, -2.58%
Neutral **
Bearish
China Shanghai Index
3318, -1.08%
Bearish
Bearish
Gold
1282, -0.39%
Neutral
Neutral
WTIC Crude
58.36, -1.00%
Bearish
Bearish
Copper
3.09, -2.41%
Bearish
Bearish
Baltic Dry Index
1578, 9.20%
Bullish
Bullish
Euro
1.1896, -0.23%
Neutral
Neutral
Dollar/Yen
112.13, 0.55%
Bullish
Bullish
Dow Transports
10187, 5.89%
Bullish
Bullish
High Yield (ETF)
36.75, -0.20%
Neutral
Neutral
US 10 year Bond Yield
2.36%, 0.94%
Bearish
Bearish
Nyse Summation Index
487, 25.11%
Bullish
Neutral
US Vix
11.43, 18.45%
Bearish
Bearish
Skew
129
Neutral
Neutral
20 DMA, S and P 500
2597, Above
Bullish
Neutral
50 DMA, S and P 500
2568, Above
Bullish
Neutral
200 DMA, S and P 500
2454, Above
Bullish
Neutral
20 DMA, Nifty
10298, Below
Neutral
Bearish
50 DMA, Nifty
10183, Below
Neutral
Bearish
200 DMA, Nifty
9680, Above
Neutral
Bullish
India Vix
14.80, 9.49%
Neutral
Bearish
Dollar/Rupee
64.54, -0.01%
Neutral
Neutral


Overall


S & P 500


Nifty

Bullish Indications
8

5
Bearish Indications
5
9
Outlook
Bullish
Bearish
Observation
The S and P 500 made new highs and the Nifty broke down last week. Indicators are mixed.
The market is topping. Time to tighten those stops.
On the Horizon
Australia – Retail sales, Rate decision, GDP, Japan – GDP, UK – PMI’s, Manufacturing production, U.S –Oil inventories, ISM PMI, Employment data, Canada – PMI, Rate decision, India – RBI rate decision
*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 december 04

The S and P 500 made a new high and the Nifty broke down last week. Signals are mixed for the upcoming week. It is looking rather ominous for the Indian market given the under-performance. Quantitative tightening by the FED is yet to be priced in 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. The critical levels to watch are 2650 (up) and 2630 (down) on the S & P and 10200 (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.


Friday 1 December 2017

Are Mutual Funds the Best Investment Vehicles? Think Again!

Mutual funds are very good investment avenues for the average investor. There is a popular belief that mutual funds are terrific investment vehicles because they potentially diversify risk away. A look at some of the best mutual funds in the recent past paints a rather interesting picture:

mutual fund comparison

source: spotalpha.com

What is interesting in the above chart  is that the returns above closely track each other. Funds that take high risk deliver higher returns while funds that take lower risk deliver lower returns. Thus it appears that none of the funds are consistently generating excess returns relative to the risk they are taking.

So how do we solve this problem? Why not consider an optimized portfolio of stocks that can produce significantly superior returns for a given level of risk? Enter the portfolio optimizer tool from Spotalpha.  Set your maximum risk profile (say -10%). Identify stocks and keep optimizing till you find a portfolio that provides maximum performance within identified risk profile. Allocate to these stocks and comeback every 15 days or so to check if there are any new re-balancing suggestions to the allocation. You are now on the path to superior returns.

 An optimized portfolio of stocks like this one delivered +154% return at a lower draw down risk of -5%, when compared to the best mutual fund which delivered +28% return for a draw down risk of -10% on an annual basis:
portfolio optimizer spotalpha

Sunday 26 November 2017

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning November 27

Indicator
Weekly Level / Change
Implication for
S & P 500
Implication for Nifty*
S & P 500
2602, 0.91%
Bullish
Bullish
Nifty
10390, 1.03%
Neutral **
Bullish
China Shanghai Index
3354, -0.86%
Bearish
Bearish
Gold
1287, -0.71%
Bearish
Bearish
WTIC Crude
58.95, 3.95%
Bullish
Bullish
Copper
3.17, 3.33%
Bullish
Bullish
Baltic Dry Index
1445, 6.17%
Bullish
Bullish
Euro
1.1925, 1.12%
Bullish
Bullish
Dollar/Yen
111.51, -0.55%
Bearish
Bearish
Dow Transports
9620, 1.45%
Bullish
Bullish
High Yield (ETF)
36.99, 0.54%
Bullish
Bullish
US 10 year Bond Yield
2.34%, -0.59%
Bullish
Bullish
Nyse Summation Index
389, 26.20%
Bullish
Neutral
US Vix
9.65, -15.57%
Bullish
Bullish
Skew
131
Neutral
Neutral
20 DMA, S and P 500
2585, Above
Bullish
Neutral
50 DMA, S and P 500
2555, Above
Bullish
Neutral
200 DMA, S and P 500
2447, Above
Bullish
Neutral
20 DMA, Nifty
10324, Above
Neutral
Bullish
50 DMA, Nifty
10166, Above
Neutral
Bullish
200 DMA, Nifty
9642, Above
Neutral
Bullish
India Vix
13.51, -1.46%
Neutral
Bullish
Dollar/Rupee
64.55, -0.55%
Neutral
Bullish


Overall


S & P 500


Nifty

Bullish Indications
13

14
Bearish Indications
3
3
Outlook
Bullish
Bullish
Observation
The S and P 500 and the Nifty were up last week. Indicators are bullish.
The market is topping. Time to tighten those stops.
On the Horizon
China – PMI, Euro zone – German employment data, German PMI, CPI, UK – PMI, U.S – New and pending home sales, Consumer confidence, Yellen speech, Oil inventories, GDP, ISM PMI, Canada – Poloz speech, Employment data, GDP
*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 november 27


The S and P 500 made a new high and the Nifty was up last week. Signals are bullish for the upcoming week. Quantitative tightening by the FED is yet to be priced in 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. The critical levels to watch are 2610 (up) and 2590 (down) on the S & P and 10500 (up) and 10300 (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 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.