[Premium] Three Charts For The Week Ahead

JC Parets
October 4, 2021

We retired our "Five Bull Market Barometers" in mid-July last year 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 Realty, Nifty Media and Nifty Auto

Let's move into this week's topics.

1. The first chart we’re looking at is CRB Index, CRB Index versus S&P 500, and MCX Crude Oil Index. Last month, CRB Index & Crude Oil closed at a 6-year high. From an Intermarket perspective, our outlook is positive for commodities as long as these indices are above the key level of 2018 highs.

Here the relative strength chart of CRB Index versus S&P 500 shows that the commodities supercycle thesis is still very much intact because we may have put in a bottom in this ratio chart. This would mean that now is the time when commodities could outperform securities as this market progresses. What we want to continue to track for that to happen, is that this ratio chart moves higher.

Click on chart to enlarge view.

2. The second chart we're tracking is Nifty Energy. We were watching this space keenly at the beginning of September and were keeping an eye on the breakout scenario here. Cut to one month ahead and we have a strong bullish candlestick that has broken above the resistance of 20,410.

As long as the price trades above this level, we're bullish on Energy for a target of near 26,975. With Commodities and the CRB index moving higher, the stage seems set for Energy to energize.

3. The third chart we're looking at is Nifty PSE which is another sector that we were watching. The price broke out above the resistance of 3,800 at its fourth attempt. With this move, we have a four-year base breakout at our hands.

The trend seems strong with the breakout candlestick that we have here, and we are bullish PSE above the risk management level of 3,800. The target to track would be 4,450.

Notice how these are the sectors that haven't been on the list of outperformers at all. We're witnessing a shift in trend in terms of sector rotation. Now will this last, or will this perish quickly, is what we're interested to find out!

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

Filed Under