[Premium] Three Charts For The Week Ahead

JC Parets
November 29, 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 $CEW/$DXY, IndiaMarketcap, Consumption 

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. Yesterday it hit a new all-time high and broke above its year-long base. Unlike in October 2021, this new high came on the back of the outperformance of the largecap stocks against the smallcap. It indicates the risky low market cap segment is yet to participate in this market rally, and there's a lot left to fulfil the market's risk appetite.

Click on the chart to zoom in.

2. The second chart we're looking at is Nifty 50 relative to the Nifty 10-year Benchmark G-Sec Index. This ratio shows that a strong uptrend in Nifty 50 relative to bonds bodes well for the rally of smallcap stocks. As we pointed out in an earlier chart, the current rally in Nifty 50 is not backed by the participation of smallcap stocks. The current environment is positive for smallcap index with the risk management level of 2018 highs.

3. The third chart we're looking at is the Nifty IT Index. Last week it made a 6-month high while retesting the resistance from May/August high. A successful 6-months base breakout would be positive for the rally in IT stocks. IT has been the weakest sector of the year. Is this situation about to change? Sustenance above this critical base will prove us right.

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, 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

Filed Under