[Premium] Three Charts For The Week Ahead

Last week we focused on the Shanghai Composite, Copper, and the Nifty PSE Index.

Let's move into this week's topics.

1. The first chart we want to look at is the Nifty Private Bank Index, which is up nearly 50% since later September. Now, as prices approach all-time highs, we're beginning to see some signs of exhaustion in the near-term.

Prices are extended from their 200-day moving average and now momentum is diverging slightly. We'd expect a correction and we're watching closely to see whether the market works off these conditions over time, price, or both. This will tell us a lot about buyers' risk appetite and their willingness to stay aggressive in an extended market.

From a longer-term perspective there is support down near 14,400, but that would be a 10% correction from current levels. Just something to be aware of given how strong the banks have been and their positive impact on the overall market.

Click on chart to enlarge view.

2. The second chart we want to look at is another extended chart, Havells India. The difference here is that prices are up nearly 90% since May and recently broke out of a 2-year base to new all-time highs.

Now with momentum diverging and prices extended from their 200-day moving average, we're watching closely to see whether buyers can maintain prices above 780 or if this turns into a failed breakout and much deeper correction.

3. The third chart we want to look at is the fresh breakout in HDFC Life Insurance. The reason we're watching this breakout attempt is to see if the consistent sector rotation we've seen since March continues, or if it's time for the entire market to take a rest.

These three charts will help us gauge risk appetite in the days and weeks ahead. Current conditions generally suggest a pause in the near-term given how extended the indices in India and other global markets are.

In the meantime, there are still opportunities at the individual stock level where the reward/risk is favorable and our risk is well-defined. We'll continue to focus on those as we see how the major indices and leading stocks digest their recent gains.

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