[Premium] Three Charts For The Week Ahead

Last week we focused on Zinc and Copper, US Regional Banks, and stocks like Apollo Tyres that were breaking out after months of relative weakness.

Let's move into this week's topics.

1. The first chart is of the S&P 500. We know, we know, we cover this every other week, but it's one of the most important Equity indices in the world. When something else exhibits relative strength versus everything else for a full decade, then we can start looking at that every week.

Click on chart to enlarge view.

For now, We're watching this 3,200 support level very closely and 3,400 on the upside. How this range develops and ultimately resolves will be critical for Equities around the globe and given the US election is happening this week, we're expecting volatility in both directions to continue.

Those are our reference levels.

If prices break 3,200 decisively, then our already defensive approach towards markets likely needs to get a lot more defensive.

2. The second chart we want to look at is the Nifty 500, with its 21-Day Average True Range expressed in percent. This is telling us what the Nifty 500 index's average daily price range is, and what we want to point out this reading remains elevated relative to where it was when prices were near resistance 10,000 in the past.

Essentially what October gave us was a pickup in intraday volatility, but compressed volatility over longer timeframes. Despite moving up or down roughly 1.4% per day over the last month, prices made no progress in either direction, creating the choppy trading environment we've had.

This is in-line with what we've been looking for, particularly given the flat 200-day moving average and mixed momentum readings.

The simple point here is that volatility remains heightened and therefore our defensive approach continues to make sense.

Given the US elections this week, we'd expect levels of volatility to stay at or above current levels for the next few weeks.

3. The third chart we want to look at is Crude Oil, which finally saw some downside follow-through from resistance near 3,200. This is another risk asset we want to be watching and given prices have fallen roughly 15%  in the last two weeks, we're watching to see if buyers step in and help stabilize prices...or if this selloff escalates.

Further weakness in Crude Oil would be a major headwind for Equities and other risk assets, so it's something to keep an eye on.

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.

Also, make sure to check out our other weekly post, "Trade Of The Week."

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

Allstarcharts Team