[Premium] Three Charts For The Week Ahead

JC Parets
January 17, 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 KRE, Lumber, & Crude Oil (in Rupees).

Let's move into this week's topics.

1.  The first chart we're looking at is Nifty Small Cap 100. That's where the big breakout is!

The price is now making new all-time high, folks! In the week gone by, the price made a new high, being the first one of the market caps to do so. This all-time high has come along with a breakout in the Nifty Small Cap 100 in USD as well.

While in rupees, the price moved past its 2008 highs much earlier, we're seeing a breakout in USD terms only now. This basically is hinting towards the kind of strength and momentum that we're seeing in this segment of stocks.

A resilient price move above this breakout would be a very good sign of the risk-on sentiment in the market with the small caps leading the way for the market rally. What will be important to see is if the price manages to hold on to these highs, or gives them up!

2. The second chart we're looking at is of European Banks. Time and again, we've mentioned the importance of this chart and how we're closely tracking the reaction of the price around the level of 20.

In the week gone by, we saw a strong move come through, whereby the price is not only trading above the crucial level of 20 but is also now trading above its most recent peaks. This means we have another breakout in another risk-on metric that we track.

If this is the trend resolution post the sideways move that we've been experiencing for a while, then this is a move in favour of a bullish stock market.

Higher highs and higher lows. If this trend continues, the market is set to move higher with more conviction.

3. The third chart we're looking at is Nifty 50 relative to Gold. With the current market move in place, it appears that the stocks are gaining their momentum back. This ratio chart is on the move again, and this time, moving north.

Gold has pretty much been the worst place to park your funds. But the large-cap stocks are now challenging the high we saw in 2018 again. A move above this level could trigger another risk-on metric in favour of the stocks.

This ratio is at an interesting level right now and we'd like to keep an eye on this one.

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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