[Premium] Three Charts For The Week Ahead

JC Parets
May 30, 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 S&P 500, Nifty 500 & USD/INR.

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 S&P 500. We included this chart in last week's post as well. But the market is in a dynamic stage right now so here we are again. SPX is back above 4,100. Now that is an important development. Why? Because as long as the price holds above its February 2022 lows, the weight of the negative evidence loses its dominance. But keep in mind, even as the price trades above, the market hasn't morphed into a bullish trend as yet. We will be in a sideways trend at best until more ground is covered.

What's important to note is that the price stopped making lower lows. For any instrument to recover, it must first stop going down.

4,100 is the level to watch. That's the line in the sand.

Click on the chart to zoom in.

2. The second chart we're looking at is Nifty Auto relative to Nifty 100. The trend in Autos seems to be picking up pace. Check out our recent post on the stocks doing well in this sector.

The ratio in the chart below is currently making new 52-week highs, as auto stocks gain some ground. But even still, this trend is selective in nature. Currently, we're looking to see if this strength sustains and if we witness a breakout from this 3-year base.  The momentum is certainly up there in the bullish territory, which is a big positive.

3. The third chart we're looking at is Nifty Private Bank relative to Nifty PSU Bank. As can be seen from the chart below, Private banks are outperforming the PSU Banks in the market at present. While Financial Services and Banks bounce off important support zones, it's the Private Banks that are faring better. Here, the 261.8% retracement seems to be holding its ground well.

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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