[Premium] Three Charts For The Week Ahead

1. The first chart we want to look at is the S&P Global 100 US-Listed ETF (IOO), which confirmed a failed breakout and bearish momentum divergence. This suggests weakness ahead in the near-term unless that level is reclaimed quickly. The 200-day moving average is rising which suggests that the longer-term trend is still positive, so if anything, we're looking for a sideways correction as opposed to a complete collapse.

Click on chart to enlarge view.

We're seeing similar momentum diverges in leading stock markets around the globe, like the Nasdaq 100, S&P 500, German Dax, and others, which strengthens the thesis that near-term price action will be choppy.

2. The second chart we're watching is ICICI Bank overlayed with Bank Nifty. Notice how both of them are struggling to get above the 38.2% Fibonacci Retracement of their 2020 declines. This has been a major headwind for the broader market given that the Nifty Bank Sector makes up around a third of the Nifty 50's weighting.

ICICI Bank reported earnings on July 25th, and while we're not going to opine on those results, we're going to be watching what the market's reaction to those results is in the coming week. If prices of ICICI Bank cannot break out decisively above 385, then Bank Nifty is also likely to remain stuck below resistance and will remain a headwind for Equities in general (and vice-versa).

3. The third chart on our list is Copper. This is a key intermarket barometer we're watching, especially in the near-term given how extended prices as momentum diverges negatively. If prices of Copper are correcting, then it's likely that stocks and other risk-on assets are struggling too.

This correction is a short-term risk, however, if prices did eventually break below 470 then we'd have to reconsider our bullish thesis towards Equities. Not there yet, but important to keep in mind in the event we do see a retest of that breakout level.

In our view, these charts will set the tone for the coming week. You can also add Reliance Industries to that list as well.

There are some risks in the near-term that we need to have on our radar, but by continuing to stick with the strongest stocks on the long side, we can limit our risk and participate in the uptrend that remains intact for our timeframe.

Make sure to check out our "Trade of The Week" and our weekend post on Reliance as well.

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

Allstarcharts Team