[Premium] Monthly Chart Updates

JC Parets
July 2, 2018

Last month we introduced the newly added Monthly Chartbook in a post where we discussed the trends and perspectives seen through a long-term lens. Our conclusions were that many of our price objectives for the Nifty Sectors and Indices were hit and that a neutral approach was best in many cases. In that type of environment we wanted to focus our long trades in areas showing relative strength like large-cap Financial Services, IT, and Consumers Goods, while focusing our short trades in areas that were showing relative weakness, like mid and small-cap Infrastructure, Realty, and Metals stocks.

This month, we're seeing very much a continuation of those same themes. The strongest sectors continue to move higher or consolidate through time, whereas the weakest sectors are making new lows. In this post we'll focus on the dozen or so charts that made notable moves, but you can find all of the updated monthly charts here. Please note that we're working to fix a technical issue that omitted our notes on several charts. In the meantime, if you have questions regarding any of the charts that do not have notes, please contact us here and we'll get that information to you.

With that said, let's start with the Nifty 50. As you can tell, not much has changed since last month. Large-cap stocks as a group continue to show relative strength and consolidate through time. Until we make a new high, a neutral approach remains best.

Click on the chart to enlarge view.

Mid-caps continue to consolidate through price, rather than time and closed at an 8-month low.

Small-caps continue to trade lower, making a 13-month closing low underneath support at 7,335. The relative weakness is clear when it comes to large, mid, and small-cap stocks.

Before we highlight some of the weakest sectors that made new lows this month, we should point out the positive development in the Nifty Pharma Index. It hit our downside price target last month and quickly reversed higher this month. We've discussed this potential bottom in several of our posts here and here, but from a long-term perspective we'd really like to see this break out above the downtrend line from its 2015 highs. We think this is the higher probability outcome, but we'll be patient and let the market prove us right or wrong.

The first weak sector on our list is the Nifty Infrastructure Index which continued lower after its failed breakout to new all-time highs earlier this year. Our downside price target as long as prices are below 3,437 is 2,975 and then 2,685 if that fails to hold.

The Nifty Commodities Index is also breaking down below support at 3,612 and made a 12-month closing low. As long as prices are below that support level, our next downside target is down near 3,055.

The Nifty Metal Index is also breaking below support at 3,460 and closed at a 9-month low. If this weakness continues, our next potential support level is near the May 2017 lows of 2,850.

The Nifty Energy had been a market leader, but continues to consolidate through price after failing to maintain its all-time highs made late last year. If prices remain below 14,080, this former market leader has potential downside to 11,500. Market bulls want to see this chart making new highs, not a continuation of the lower lows we've seen over the last few months.

The Nifty Auto Index has yet to break support at 10,550, but the more times a level is tested the more likely it is to break. With prices making a 10-month closing low, a break of support looks increasingly more likely and would target 9,130.

The Nifty Media Index closed at 8-month lows after breaking support at 3,155. As long as prices are below that level, the index looks likely to test former support / resistance near 2,501.

The last sector on our list is the Nifty Realty Index which broke support and made a 12-month closing low. As long as prices are below 292.75, our downside target would be down near 215.50.

We don't want to neglect Crude Oil here, which made a massive move to the upside this month and closed at 3.5-year highs. We've been talking about the strength in Crude Oil for a while now and this chart would suggest prices are headed toward 5,500 as long as they're above 4,670.

Copper on the other hand, continues to fail to close above resistance near 466. It made a breakout attempt earlier this month, but quickly reversed and closed near the lows. For now, the rally in Copper seems to be on hold and would suggest we focus on some of the other base metals and commodities that are trending.

Last on our list is USD/INR, which we've been watching for new highs. We didn't get them this month, but the breakout looks close, so we want to watch for a move above 69.40 for a signal to get long with a target near 80.

The Bottom Line: As you can tell, there weren't many drastic changes to this month's charts of the Nifty Sectors and Indices. The strength continues to be in large-cap Financial Services, Consumer Goods, IT, and in certain areas of Pharma, whereas the weakest areas like mid and small-cap Infrastructure, Metals, Commodities, Realty, Media, and Autos continue to struggle. This is still an environment where we want to continue to be look for the best reward/risk opportunities, both long and short, in the stocks that have a clear trend to take advantage of.

To view the charts above and the remainder of the Monthly Chartbook, click here. To view all of the other updated chartbooks, click here.

Thanks for reading and let us know if you have any questions.

Allstarcharts Team

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