[Premium] Three Charts For The Week Ahead

JC Parets
June 22, 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 ACWI with US Dollar Index, USDINR, & Nifty50.

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 the Shanghai Composite vs the S&P 500. China was one of the first few markets to start losing its ground when the market correction began. And similarly, has been one of the first few markets to recover after marking lows in March 2022. As of now, China has been covering more ground since its lows. Here we have the Shanghai Composite relative to the S&P 500 and you'll see that the ratio chart has broken out of a downward sloping trendline.

With this move, China is definitely a market to track as it continues to add breadth to its rally.

Click on the chart to zoom in.

2. The second chart we're looking at is Nifty Auto/ Nifty 100. Nifty Auto has been one of the most resilient sectors in the Indian market. On a relative basis too, the sector has been gaining strength marking a new 52-week high. The only trouble is that every time the relative chart reached these levels, it turns away. This has happened on four occasions in the past. And no doubt this a completely logical place to halt.

If this ratio turns away from here, then the Auto sector will turn away from the strength and momentum its been experiencing over the past few weeks.

We're keeping an eye on this chart to see how it pans out in the week ahead.

3. The third chart we're looking at is Nifty Metal. Metals have experienced a severe drawdown and the price has now moved below the support zone of 5,000. With this move, the next target that opens up would be 4,150. Notice that the price is now back into its big base, negating the breakout we had witnessed in mid-2021. Several stocks in this index, as a result, are going through a sharp correction.

With this breakdown, it seems like that correction will go on for longer.

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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