We've been writing about how the momentum is to the upside for the last few weeks, but now prices are testing overhead supply across all the major Nifty indices.
If you haven't read our last few posts we'd highly encourage it, as they outlined our shorter-term views within the context of the long-term trends.
If you're all caught up, then let's take a look at the levels we're watching in the Nifty 50 and other indices.
Here's the Nifty 50 running into overhead supply near 10,000. Momentum failed to reach overbought territory despite the more than 35% rally since the index's March lows.
US Stocks remain the strongest game in town, with the Nasdaq 100 closing pennies from all-time highs today.
On the back of that, I wrote a post for US Subscribers outlining what the "safe haven" assets of Yen, Treasury Bonds, and Gold are doing and what it means for stocks as an asset class.
Given that US market action tends to set the tone for the rest of the world, I think it's a good read for Indian market participants as well.
Looking at Monthly Charts only takes about an hour per month and is one of the most valuable exercises in our process. By focusing on the long-term, we can filter out the noise and identify what's really happening with a stock, index, etc.
In this post, we wanted to share a few charts that stood out to in May.
Earlier this month we outlined the "Five Bull Market Barometers" we're watching to identify the beginning of a new bull market in stocks.
In this post, we'll update those charts without going into as much detail as to why they're important. So if you haven't read our initial post linked above, we'd encourage you to check it out.
With that said, let's jump in and see how these charts have developed since.
Friday afternoons are my favorite part of the week, but not just because the weekend is starting. Instead, it's because we get fresh weekly candles to analyze the long-term trends of the securities and assets in our universe.
And this week, we've got a big development in Silver. Prices went out at their highest weekly closing price since September 2013.
Let's take a look at what it means and how we're trading it.
The market remains a hot mess where we're preferring market-neutral trades, however, some absolute trades are appropriate when the reward/risk is skewed heavily in our favor.
We outlined some favorable longs and shorts earlier today.
Another way of skewing the reward/risk in our favor is by looking for "big bases."
The way we learned it is the bigger the base, the higher in space and this is certainly a big base. And the reason we like looking for base breakouts in this environment is two-fold.
First off, big bases take time to form because they are caused by steady institutional accumulation. Mom and pop investors aren’t the ones creating this type of pattern, so we know that there’s underlying demand that will support prices if they do move lower.
One of our six charts to watch this week is the Nifty Bank Index, so today we want to look at two stocks showing symptoms of the underlying problem in the sector.
We've been using our "Five Bull Market Barometers" to measure the long-term health of the market and remain in the camp that risk in Equities remains elevated.
In this post, we're going to outline several charts we think will set the tone for the broader market through the rest of the quarter.
First, and most importantly, is the Nifty Bank Index which made new relative lows this week. On an absolute basis, prices are nearing their March lows of 16,100 after failing to reclaim their 2015-2016 highs in April.
Click on chart to enlarge view.
What we're watching is how prices react to those March lows. Is there any meaningful demand at that level? or does the trap door open and we see a quick move towards 13,500?
Earlier this month we outlined the "Five Bull Market Barometers" we're watching to identify the beginning of a new bull market in stocks.
In this post, we'll update those charts without going into as much detail as to why they're important. So if you haven't read our initial post linked above, we'd encourage you to check it out.
With that said, let's jump in and see how these charts have developed since.
During Tuesday's Members-Only Conference Call we discussed not wanting to be aggressively long or short stocks on an absolute basis. Our Five Bull Market Barometers continue to suggest this is a choppy, messy environment where we need to be very selective when putting capital to work. Cash/patience and uncorrelated trades like Gold continue to work for those who have the ability to stay out of the equity market.
Not everyone has that luxury though. Many fund managers have a mandate to be long stocks regardless of the market environment. Some may have the ability to short stocks against their exposure, but many are "long-only" and need to outperform in weak markets by owning the stocks that are going down less.
