[Premium] Three Charts For The Week Ahead

JC Parets
August 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 US Dollar Index, All India Market Cap vs Nifty 500, & Nifty50 Equi Weight.

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 VEU. VEU is the All World Excluding US ETF. So we're basically looking at global markets except for the US. We've been tracking this chart for a long time. And if you recall, we mentioned time and again how important those 2018 highs were. It's been a long-term resistance zone that was overcome in 2020. But in 2022, the index breached that support and signaled the correction that we witnessed.

Now the price has retested those levels in a classic retest manner and has failed to move past the resistance. This does not bode well for the global markets. It is crucial that we get past these levels for the market sentiment to turn bullish again.

Click on the chart to zoom in.

2. The second chart we're looking at is the Value Line Geometric Index and the Nifty Small Cap 100. Similar to the chart above, the Value Line Geometric Index is retesting its breakdown level (for the second time now) and turning away from it. Notice that the Small Cap Index in the lower panel looks extremely similar to this setup. Both have retested the breakdown level for the second time.

While a lot can be said about the market, a successful bull market comes through only on wide market participation. That is lacking at this point. Will this continue to play out this way? We can't say, but we're also keeping an eye on the US Dollar to see if there are any signals there.

3. The third chart we're looking at is Nifty Next 50. Back in 2021, this was one of the first indices to have halted at the most logical point, giving us an indication of what's to come. Eventually, all other indices followed suit and the market moved sideways and then lower.

Now we're back to the scene of the crime. There is a lot of price memory here, as can be seen in the chart. How the price reacts around these levels will be crucial going forward.

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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