[Premium] Three Charts For The Week Ahead
Let's move into this week's topics.
1. The first chart we're looking at is the Nifty Small-Cap 100 Index, which made new marginal highs last week. What's worth noting is that momentum is potentially diverging negatively here, although that needs confirmation by prices breaking back below their former highs near 5,910.
Additionally, neither the Large-Cap nor Mid-Cap Indexes made new highs last week, which is potentially a negative divergence. Do Small-Caps catch down or are the other indexes about to catch up? Or is this a sign that the Small-Cap index is losing steam in the near-term?
Click on chart to enlarge view.
2. The second chart we want to look at is the Nifty Media Index. This has been a laggard for a while and prices have spent the last month consolidating tightly below resistance. Whether this consolidation resolves to the upside or downside will tell us a lot about the strength (or weakness) of risk appetite in the market. Remember, broadening participation is what we want to see in a bull market, not deterioration.
3. The last chart on our list is again highlighting the pickup in deterioration we've been hitting on over the last few weeks. CARE Ratings Ltd. is yet another Financial Services company that has not been able to get back above former support. Weakness in this area remains a big concern and charts like are another data point in favor of the bears.
In our view, these charts will help set the tone for this week and provide us information on how we should approach the market in the coming weeks. As we've been discussing for the last few weeks, the data is slowly shifting from overwhelmingly positive to neutral/positive.
This doesn't mean we throw the long-term bull case out of the window, but it does mean in the near-term we want to remain more selective in the things we are buying and selling. The current environment is more conducive to stock picking than it is to broad-market index investing.
Make sure to check out our other weekly post, "Trade Of The Week." And if you haven't watched last week's September Conference Call Recording, we'd highly encourage it.
Thanks for reading and please let us know if you have any questions.
Allstarcharts Team