[Premium] Three Charts For The Week Ahead

JC Parets
August 2, 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 Nifty 50/EEM, S&P 500 & Nifty IT/Nifty 100.

Let's move into this week's topics.

1.  The first chart we're looking at is Emerging Markets Small-Cap ETF ($ EEMS), which tracks the small-caps, and the Emerging Market ETF ($EEM), which tracks large & mid-capitalization emerging market equities.

Small-Caps continue to sustain above the big base, whereas the Emerging Market ETF is retesting its 2018 high.
2018 high is a crucial level as all risk-on metrics peaked in early 2018.

Here the breach of 2018 high by the EEM could disrupt the ongoing trend. We'd like to keep this on our radar to gauge market participation as we advance.

Click on chart to enlarge view.

2. The second chart we're looking at is S&P BSE DOLLEX 30 (the USD version of the S&P BSE SENSEX) and S&P BSE SENSEX which measures the performance of the 30 largest float-adjusted market-cap-weighted Indian companies.

SENSEX is sustaining above its February high in a sideways consolidation, whereas DOLLEX is yet to cross above that level. The resolution of this divergence will provide us valuable information about the next leg of movement in top large-cap names.

Will this play out like the move we saw in 2018? Well, we're just going to have to wait and watch.

3.The third chart we're looking at is  Nifty Metal Index. This week metal index closed at an all-time high after breaking above the 13-year base.

It's important to track such big base breakouts because when they don't follow through, the move in the opposite direction tends to be fierce.

From failed breakouts come fast moves in the opposite direction.

If this level holds, then the next target to track would be 8,155.  A continuation of this trend is undoubtedly a big positive for commodities!

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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