One of the reasons we've remained so bullish on Equities as an asset class is because of the continued expansion in the number of stocks participating to the upside.
In this week's "Chart Of The Week," we want to highlight a simple metric that can be used to identify the breath of the Indian stock market.
The Top/Down approach to markets is at the core of what we do at All Star Charts. That means starting at the asset class level and peeling back each layer to refine our view of the smaller components that make up that asset class. With each new layer, we discover information that helps us form our weight of the evidence conclusion.
That brings us to our new weekly column, The Top/Down Take, where we hope to educate readers on how we execute this process and highlight its value through the analysis of popular stocks.
We retired our "Five Bull Market Barometers" in mid-July 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.
Given many of the Equity indices in India are heavily concentrated, it can be difficult to identify what's really happening in a specific sector or industry group just by looking at the Nifty sector/thematic indexes.
The best example of this is Nifty Energy, where Reliance makes up a massive 37% of the weighting.
One way our process has adapted to overcome this issue is by using custom Equally-Weighted Indexes to identify the real trends occurring in these areas of the market.
Today, we're going to look at an Equally-Weighted Index to identify what's happening in the Energy sector and how we're taking advantage of it.
Today, we want to take a look at a key retest that's about to occur in Euro/Rupee and revisit a few setups we've spoken about in the past that are approaching actionable levels.
Here's the Euro/Rupee post that sparked the need for this post. Two weeks ago we wrote about the notable breakout here (and breakdown in Rupees), but the Euro was the only pair to see any follow-through. Now that prices are pulling back, we want to see if this coming breakout retest is successful.
Today we want to follow up on that theme, show why it's still intact, and outline stocks with an attractive reward/risk at current levels.
We've written extensively about what the Large-Cap/Small-Cap ratio means and how we interpret it. If you haven't read them, I'd highly recommend checking them out before continuing with this post (June 9th post and June 19th post)
But, to sum it up the idea here is that Small-Cap outperformance is associated with a Bull Market in Indian Equities because it signifies risk appetite among market participants and a broad-based market rally that has sufficient participation from sectors/industry groups.
We retired our "Five Bull Market Barometers" in mid-July 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.