[Premium] Three Charts For The Week Ahead

Last week we focused on the S&P 500, the Nifty 500's volatility readings, and Crude Oil.

Let's move into this week's topics.

1. The first chart we want to look at is the Nifty Small-Cap 100, which remains the last holdout of the major indices. The Large and Mid-Cap Indexes have already pushed to new highs, but Small-Caps have yet to.

We're watching to see if they play catch-up or if they're a warning sign that the other indexes are getting ahead of themselves in the near-term.

Click on chart to enlarge view.

2. The second chart we want to look at is tied into the first one. If we see Small-Caps start to participate and Equities as an asset class push to new highs, we'll likely see a short squeeze in several names like Coal India Ltd.

Prices recently undercut support and are now trying to reclaim 122.50 as momentum diverges positively. This failed breakdown would likely cause a short squeeze and push the stock back up towards the top of its pre-breakdown consolidation.

The point being, if Coal India Ltd., one of the worst stocks in the market can get going to the upside, then Equities, in general, are probably doing OK in that environment.

3. The third chart we want to look at is the Nifty IT Index. The strongest stocks/sectors/assets tend to consolidate ABOVE their price objectives, not below them, and that's exactly what we're seeing in the Nifty IT Index.

If this sector is above 20,275, we're likely in an environment where stocks are trading sideways to higher. Should this leader start to falter and get back below that level, then we need to be paying attention as the short-term trend in Equities, in general, will likely be under pressure.

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