[Premium] Three Charts For The Week Ahead

JC Parets
November 15, 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 the US Mid-caps and Small Caps, DAX and CAC40, & Nifty Realty.

Let's move into this week's topics.

1. The first chart we’re looking at is that of Global indices. Last week we discussed Germany and France making new highs. When you look at the major indices across the globe, you'd see that there are either all-time highs or 52-weeks highs across most of these charts.

This is definitely a signal of the strength in the market whereby new highs continue to come through. This trend of course adds to the narration of "It's a Bull market".

We'll look out for divergences and potential rollovers here to see if this trend continues or if we see an expansion in lows next time around.

2. The second chart is Nifty IT. We can see that the price has bounced back from the support level of 34,250. With this move, if the price continues its stellar run, IT will continue to be one of the strongest sectors in the market.

Off late, we were noticing a pause in this index, with the relative chart too pointing towards a halt in trend. But IT hasn't let go of its strength and bounces back after every halt. Is it going to be the same this time around as well? It's quite possible!

We are bullish above the risk management level of 34,250. Seeing as the price is trading quite close to the level and inching higher, the reward to risk ratio is favorable. The next target to track would be 49,625.

3. The third chart we’re tracking is Nifty Pharma relative to Nifty 100. Now, this is an interesting one.

We've seen Pharma consolidate in a sideways range for some time now. With that, we saw the relative chart drooping lower. At present, the ratio is at new 52-week lows.

But what is interesting is the positive divergence that can be seen at these new relative lows. This is also coming at a time when Nifty Pharma is trading near the lower end of the trading range.

Could we see a move back towards the highs of the trading range? Yes, that's definitely possible.

How Nifty Pharma pans out in the week ahead would be quite fun to track!

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