[Premium] Three Charts For The Week Ahead

JC Parets
October 5, 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 US DXY/TNX, USDINR, and Nifty Financial Services.

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

1. The first chart we’re looking at is Nifty 50 relative to Dow 30. For those wondering, India is clearly outperforming the global indices. Here is Nifty 50 outperforming the Dow 30 and making new all-time highs while at it! India has been displaying great resilience and one can see that on the charts. While this relationship holds, India continues its outperformance.

Click on the chart to zoom in.

2. The second chart we're looking at is the MSCI India ETF($INDA) vs MSCI Emerging Market ETF($EEM). Its conspicuous that it's been a year since India continued to outperform the emerging market.

The narrative of India's decoupling from global market chaos is nothing new to discuss. There's been a lot of internal sector rotation, like Energy, Industrial, and Automobile. Last week, MSCI All Country World Index ($ACWI), $EEM, and S&P 500 hit new 52-week lows. Amid this bearishness, the Nifty 500 is down just 8.5% from its all-time high. So, the question remains: How long can this decoupling be expected to play out? Our answer is until the price says so.

3. The third chart we're looking at is Nifty Pharma relative to Nifty 100. We shared IT relative to Nifty 100 recently and a similar move can be seen here too. The relative strength chart is bouncing back and has currently breached the downward sloping trendline. But what we're more interested in, is the immediate resistance coming up. How the price reacts around these levels will decide the fate of Pharma going forward. Its been a year since the price has been respecting this resistance level. Will that hold true going forward?

We're watching this chart to see what it does next!

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