Technicals for week ending – 16th December 2016.

Note : This is not a recommendation and I am not a registered analyst, these are just data points and an assessment of the positives and negatives from a longer term point of view.

Nifty Weekly

Broader theme - As the Index PE ratio is still around 21, the most likely scenario over the longer term is either we consolidate around these levels or fall further while a sharp run up will put us in mania territory. Either ways the end result for all 3 scenarios doesn’t warrant putting more money to work around here.

Since this will be the last post for 2016, wishing you all a merry Christmas and a happy new year! Also, just focusing on the most basic charts J

Observations (Charts below)

1 – The benchmark Nifty index is struggling to close above its 40-week moving average and is stuck between intermediate term support and resistance zones.

2 – The Nifty/Bond ratio for the total return indices is below its 40-week moving average suggesting that over the longer-term bonds may outperform Nifty.

3 – Till last week 8 of the 9 broader indices were holding above their 40-week MA but now only 4 of the broader indices are above that moving average!

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Chart 3 

Sector Momentum Update

Updating the short-term momentum model for the week ending 16^th December 2016.

Technicals for week ending – 9th December 2016.

Note : This is not a recommendation and I am not a registered analyst, these are just data points and an assessment of the positives and negatives from a longer term point of view.

Nifty Weekly

As the Index PE ratio is around 22 the most likely scenario over the longer term is either we consolidate around these levels or fall further while a sharp run up will put us in mania territory either ways the end result for all 3 scenarios doesn’t warrant putting more money to work around here.

Observations (Charts below)

1 – For the Nifty & its highest weightage constituent – Bank Nifty – both indices are between massive support & resistance zones and stochastics for both indices are in oversold territory. Given the December seasonality and light trading activity shorter term outlook looks to be a bit on the positive side.

2 – Also, lending support to the above point is that the FII flows in the index futures segment is on long side and client category positioning in the index options long segment is not at an extreme level. In the past year, we have seen that when the Client category index put long/call long ratio hits extreme levels there is some short-term reversal.

3 – Now on the longer-term perspective the Nifty/Bond ratio for the total return indices is below its 40-week moving average suggesting that over the longer-term bonds may outperform Nifty.

4 – Most of the Individual sectors are below their 40-week MA but broader indices are still holding up. Current situation seems a bit similar to the Mar’15 top when individual sectors were the first to lose their 40-week MA followed by the broader market.

5 – On the intermarket strength perspective the Metals and Energy index still continue to outperform and have been in the top 2 ranks based on RS ratio and have also been in the top 2 based on the short term momentum model - Sector Momentum Update . Also, Energy looks promising to be a potential outperformer from a longer term perspective and in case you missed it I had written about it few weeks ago here - Energy Index – Potential Outperformer ?

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Chart 5 

Sector Momentum Update

Updating the short-term momentum model for the week ending 9^th December 2016.

Monthly Update

Updated figures for the equity-bond rotation models as on end November’16.

I first wrote about these here:

Sector Technical Analysis: Buy & Rotate

Sector Technical Analysis: The Simple strategy…

The moving average model is in Nifty total return index while the momentum model has moved to bonds.

Benchmark comparison and stats:

Energy Index – Potential Outperformer ?

I know, I know – the Energy Index has been the most frustrating index and has returned virtually nothing since mid-2009. BUT at the moment this index has popped up in 2^nd place on the short-term momentum model as well as the longer-term ratio charts. Anyways, before we look at all the ratio charts, just a refresher –a rising ratio means that the numerator is outperforming the denominator

Ok, so dividing the Energy Index by the benchmark Nifty and other sector indices we can see that in a lot of cases the ratio was flattish from mid-2015 onwards and started to breakout somewhere around the middle of 2016. The ratio is above its 40-week moving average for all sectors except Metals. A rising ratio against most indices suggests that Energy could be a outperformer over the longer term and worth keeping on the watch list – Metals popped up earlier at rank 1 for short term momentum and on the ratio charts but it is too late to write about that now J

Note – similar situations developed in the Auto & Pharma indices and I wrote about them here:

http://indiasectortechnicals.blogspot.in/2015/11/auto-index-setting-up-for-outperformance.html

http://indiasectortechnicals.blogspot.in/2016/04/pharma-in-trouble.html

Will this index continue to frustrate or finally move ?..well..lets see how this plays out J

Technicals for week ending – 25th November 2016.

Note : This is not a recommendation and I am not a registered analyst, these are just data points and an assessment of the positives and negatives from a longer term point of view.

Nifty Weekly

Chart 1 Pinbar at support + a stochastics buy signal from an oversold reading.

Chart 2 All broader indices/bond ratio below 40-week moving average

Chart 3 Average & Median distance of sector indices from their 52 week closing highs.

Chart 4 Many sector & broader Indices below their 40-week moving average

Chart 5 In terms of intermarket strength Metals still on top, have a look at the Energy index! 

Sector Momentum Update

Updating the short-term momentum model for the week ending 25^th November 2016.

Technicals for week ending – 11th November 2016.

Note : This is not a recommendation and I am not a registered analyst, these are just my observations and an assessment of the positives and negatives from a longer term point of view.

Nifty Weekly

Wow ! what a bombshell we got this week. Trump + the currency news. Well that leaves a lot of charts damaged -

Chart 1 PE ratio still above 20

Chart 2 Nifty/Bond ratio below its 40 week moving average & momentum wise too - bonds are now outperforming

Chart 3 Avg & Median distance of sector indices from their 52 week closing highs took a beating

Chart 4 Many sector Indices below their 40 week moving average

Chart 5 In terms of intermarket strength Realty got beaten down from the top spot to near bottom within a week ! 

Sector Momentum Update

Updating the short term momentum model for the week ending 11^th November 2016.

Technicals for week ending – 4th November 2016.

Since we have an important event coming up so no point predicting. Just keeping this one short & will look at other data points next week. Though Nifty has broken past 1st support zone of 8500-8600 we still have the highest weighted sector in Nifty i.e. the Bank-Nifty right at support and the broader Nifty 500 is also right at supports.

Sector Momentum Update

Updating the short term momentum model for the week ending 04^th November 2016.

I first wrote about this model here Sector Technical Analysis: Sector Momentum Model

Monthly models update

Updated figures for the equity-bond rotation models as on end October’16.

I first wrote about these here:

Sector Technical Analysis: Buy & Rotate

Sector Technical Analysis: The Simple strategy…

For the benchmark indices – Both the moving average and momentum models are still invested in Nifty total return index.

Benchmark comparison and stats:

Sector Momentum Model Update

Updating the short term momentum model for the week ending 30^th October 2016.

I first wrote about this model here Sector Technical Analysis: Sector Momentum Model

Technicals for week ending – 21st October 2016.

Note : This is not a recommendation and I am not a registered analyst, these are just my observations and an assessment of the positives and negatives from a longer term point of view.

Nifty Weekly

Still sticking to a broader theme of a consolidation with a positive bias as mentioned in the previous weekly posts. On a longer-term time-frame data still suggests to keep a positive stance on Nifty. Exit rules – weekly close below 40-week MA or monthly close below 10-month MA.

Observations (charts below):

Chart 1 Some global context here – on the weekly charts of the ETF’s of Emerging markets (EEM) and BRIC (BKF) we see that both are sustaining well above support zones that go back 5 to 6 years! The 40-week MA on both these ETF’s had been flattish for years and have now started sloping up. Sustaining below the support zones would be worrying but till then the scenario seems to be positive.

Chart 2 On the weekly charts the Nifty index gave a bit of a scare last week but closed this week well above the support zone. Drilling down to the smaller time-frame daily chart this price action could be called a failed break-down but I am not so sure about that. Anyways, other indices like Nifty 500, Midcap and Smallcap indices are way above supports and even above the September expiry day (surgical strike) highs. The broad strength still makes me lean to the positive side and we have not seen any break-downs in the broader indices. Even Bank-Nifty which has the highest weightage in the benchmark Nifty has showed strength by closing above supports and previous week’s highs. The momentum based Nifty Alpha Index is also in new all-time high territory!

Chart 3 this one had showed some warning signs but is back in positive territory now - the average and median distance of the sectoral indices compared to their highest 52 weekly closing. Both the readings took a hard knock the week before and recovered this week. Current readings are at -4.5% and -2.6%. I have not tested this but on a glance if the readings stay below 8/10% for longer it has led to corrections in the benchmark index.              

Chart 4 On intermarket strength we still have Metals, Realty and Auto in the lead. The defensive sector indices such as FMCG, Pharma and IT are at the bottom ranks so RS ratios sorted by them being above 40 week moving averages suggests that there is no flight to defensives yet. Also, if you refer to the page “Weekly Sector Relative Strength Charts” all broader indices are beating Nifty and the 10 year bond index and most sector indices are beating the 10 year bond index – not a negative from any angle! Since Metals, Auto and Realty have been the leading indices on a relative basis, keep an eye on these indices for any breakdowns – If they break past supports then would be a good time to evaluate and take some risk off the table.

Chart 5 As for the broader trend, all indices except IT are above their 40 week moving averages. Still supportive of the bullish stance.

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