[Premium] Three Charts For The Week Ahead

Last week we focused on AUD/JPY, Nifty 500 percentage of stocks above 50-day MA, Nifty Media.

Let's move into this week's topics. We have big important breakouts to track this week.

1.  The first chart we're looking at is that of ACWX and EFA. ACWX stands for All Country World Index excluding the US and EFA stands for Developed Markets excluding North America. These are the two indicators of global market health.

So when we're looking for signals with regards to strength or weakness, these indices give us a good idea about the global markets excluding the US. Our worries start to increase when these indices trade below their crucial 2018 highs, which they are right now. But the reason why we're not panicking yet is that there seems to be a strong bounce back from these breakdowns.

Now is this a false breakdown? Is this a premature breakdown? That's what we're here to track. But seeing as the indices across the globe have recovered from important levels of support, this image does seem too dangerous at the moment. But this is one of the most important charts to track global market health.

2. The second chart we're looking at is that of Nifty Midcap 100. As can be seen from the chart below, this index slipped below its risk management level close to 28,700. This became problematic since the mid- and small- caps are an important category of shares in the market. A correction in these names translates to risk-off market sentiment. That in turn translates into a messy market at best and a correction at worst.

What we see last week, however, was the price recovered back above the crucial level. A u-turn this quick could mean that the move was a failed breakout. And if it was so, we'd like to keep an eye on this one, because from failed moves come fast moves in the opposite directions.

3. The third chart we're looking at is Stoxx Europe 600. This is a comprehensive index comprising 600 stocks from across 17 European countries.

This is one of the examples of how international indices are holding on to crucial multi-year supports and bouncing back. This is after the recent swift correction that we've been witnessing that had been dragging all the indices down.

Sure, this means that we're stuck in a range. But it also means that we're not looking at a multi-year support breach! Most of the indices have halted at such important support levels and Stoxx Europe 600 is one of them. Does this mean we're back in a messy market? Yes. But does it also mean that we're not enthusiastic about shorting stocks just yet? Oh yes!

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