[Premium] Three Charts For The Week Ahead

JC Parets
January 3, 2022

We retired our "Five Bull Market Barometers" in 2020 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 MSCI ACWI, Consumer Discretionary vs Consumer Staples and Equi Weight Metal Top 10.

Let's move into this week's topics.

1.  The first chart we're looking at is Nifty 500. The recent pickup in activity in the market has been backed by participation as can be seen in the chart below. The High-Low Index is indicating to the participation that we have seen in this bounce back.

Notice how during the prior minor rallies, the High-low index continued to move lower, rather than pick up the pace. Hence, this pick in a pace that we're seeing right now is a positive for the current trend. How much of this move is sustainable, is the question we're looking to answer by observing the market ahead.

2. The second chart we're looking at is the Monthly Chart of Nifty IT. IT has been an absolute outperformer in the current market. Not a single index has come close to the consistent returns generated by this sector over the past year.

As can be seen below, the price has moved past the resistance level of 37,100. This is the same level where the price had been halting in the move in past. This is a monthly chart so keep a long-term view in mind while tracking these levels. We are looking at a target close on 59,500 going forward. Sure that sounds like something to discuss in the future. But what this chart helps us identify, is the continuity in trend. We will move to short-term charts to identify entry and exit points.

For now, we know that IT is definitely on the buy list. You can check out our latest IT ideas here.

3. The third chart we're looking at is Nifty Pharma. The price moved below the crucial breakout level of 14,020 and has now climbed that hurdle again. While teh signals have been slightly mixed, we're seeing relative strength come through in this sector. This is something we'd like to keep an eye on, because it seems as if a move is brewing here. We shared a post highling the interesting ideas in the Pharma space here.

In our view, these charts will help set the tone for this week and provide us with 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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