[Premium] Three Charts For The Week Ahead

JC Parets
March 1, 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 Nifty 50 relative to Bonds and Gold, Nifty Financial Services & Aluminum.

Let's move into this week's topics.

1.  The first chart we're looking at is the First Trust India Nifty 50 Equal Weight ETF. This U.S. Dollar-denominated ETF provides equal exposure to all Nifty 50 constituents, allowing smaller companies to contribute as much as the larger ones within the index. Here, the price faced resistance at 161.8% Fibonacci level from its 2018 high – 2020 low extension and consolidated below it. We're looking for sustenance above December 2021 low for it to remain in a primary uptrend. It's positive that the momentum indicator is posing a potential bullish divergence. The sideways range has a lot of overhead market memory. It is prudent to stay cautious as long as the price is below the 200-day moving average.

2. The second chart we're looking at is the Nifty Smallcap Index USD and Nifty Smallcap 100 over 15 years. In January, Smallcap marked a new all-time high. The crucial inflection point turns out to have been a failed breakout.

From a primary uptrend perspective, the 2018 high in Nifty Smallcap 100 is at a momentous level (in the lower pane) where the risk peaked in the previous rally. The breakdown in smallcap would be negative for market risk appetite and for the market trend.

3. The third chart is an Equally weighted custom index of Top 10 Metal stocks. It has been consolidating in a sideways range for over ten months. Here the consolidation above the critical Fibonacci level is positive. Amid rising market volatility, Metal stocks continue to provide opportunities.

Looking at the sectoral index, Nifty Metal relative to Nifty 50 made a new six-month high. It shows the relative outperformance against the broader market.

Commodities continue to pose strength with new 52-week highs in Aluminum, Brent Crude, Cobalt, Gold, Wheat, Palm Oil-Crude, Nickel, Gas-RBOB, Tin, Soybean.

These developments are a favorable tailwind for the metal sector.

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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