[Premium] Three Charts For The Week Ahead

JC Parets
July 10, 2021

We retired our "Five Bull Market Barometers" in mid-July last year 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 Nasdaq 100, Growth vs. Value & ASC Base Metals.

Let's move into this week's topics.

1.  The first chart we're looking at is the Emerging Market($EEM) ETF vs. the Developed Market($URTH) ETF. In this relative strength chart, we can see the underperformance of the Emerging market against the developed market as the ratio is trading near its historical lows (2020 covid lows).

From an intermarket perspective, this ratio helps in determining the comparative risk appetite for Emerging Market equities. Here the continued weakness raises caution towards the emerging market constituent countries.

If this continues to dip lower, we will see that sentiment flow into the Indian market as well.

Click on chart to enlarge view.

2.The second chart we're looking at is the Nifty Realty Index. This week it closed at a new 52-week high after breaking above the base formed over the past four months.  Further, it is trading only a few points below the 2018 highs, which were significant levels from a sentiment point of view.

A weekly close above 375 will confirm a multi-year base breakout. It is interesting to note that the BSE Realty index is already trading above its 2018 high already. So is the breakout going to make an entry here too? It's possible.

While the broader market is in a sideways action, it is positive to see continued strength in the realty sector.

3. The third chart we're looking at is Zinc. Over the past week, base metals didn't fare as well as expected and on the contrary, closed in the red. Zinc on the other hand is pushing up against its immediate resistance of 243. While we are bullish on the metal above the level of 230-231, the short-term resistance being taken out would be a big positive for this metal.

A breakout in zinc could add to the strength in other base metals as well. We'd like to keep an eye on this chart to see the kind of implications it can have in the weeks ahead.

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