[Premium] Three Charts For The Week Ahead

JC Parets
June 7, 2021

We retired our "Five Bull Market Barometers" in mid-July to make room for a new weekly post that's focused on the three most important charts for the week ahead.

This is that post, so let's jump into this week's edition.

Last week we focused on Nifty 50, Crude Oil Futures, and CRABS index.

Let's move into this week's topics.

1.  The first chart we're looking at is Nifty 50 relative to Indian Bonds. NIFTY G-sec Composite Index is constructed using the prices of the top 10 liquid Government of India bonds.

The ratio has broken out of a multi-year base to a new all-time high, eclipsing the peaks made in February 2021. It shows that alpha remains in the Stock Market on a long horizon, while the opportunity cost continues to be in the Bond Market. A continuation of this trend would put Bonds in a much better position than they have been for quite some time!

Click on chart to enlarge view.

2. The second chart we're looking at is Nifty Auto. The price bounced from the important support of 9,300. With that move, we also witnessed a breakout above the level of 10,400. A sustained move above this level could take the index higher towards our target of 12,100.

Nifty Auto has been an underperformer for some time now since it rolled over from levels close to 10,400. As the price attempts to move past the same level again, it will be important to see how far this move catches a bid.

We are watching this space to see if the rotation into this sector will continue to play out or perish soon.

3. The third chart we're looking at is Nifty Media. Although this sector has been an underperformer throughout the market rally, we're seeing signs of some form of recovery here. The price is now inching towards its 2020 highs and is attempting to move towards the level of 2,000.

A trend reversal in this sector would bode well for all the constituents that have been feeling left out for quite some time.

We're watching this move to see if we get growing strength from this sector in the weeks ahead. If it rolls over around 2,000 it wouldn't be surprising though!

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

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