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
We had a rare development this week
as the Nifty closed above its upper Bollinger band. This has happened 20 times
since 2010. BUT 2014 looks like a big outlier due to the election rally &
2014 saw 10 instances of Nifty giving a weekly close above this band – which does
sound like a outlier. Anyways, here are the results 1/3/6 months out from the
signal date.
Chart 1 OK, back to good old
support-resistance and a dumb moving average. The Nifty is sustaining above
prior resistance and we have an upward sloping 40 week MA and the ATR based
super-trend has also shifted higher. Both these are near important support zone
of 9700. Under the surface, the damage seems to be spreading with almost 30% of
the Nifty 500 stocks that are now more than 20% below their 52 week highs. I don’t
have much data but the current period seems eerily similar to the early 2015
time period. What now? – Well, 2017 has been a record of sorts with every
market going up! Even the Nikkei is pushing through levels not seen in almost
20 years. Despite the lacklustre data point above & the damage underneath I
still maintain the positive bias – let the support break and price show some signs,
then will think on risk-off terms.
Chart 2 Nifty total returns/10 year Bond index ratio is above its 40-week MA &
momentum also favours Nifty index, indicating longer term outperformance for
Nifty vs bonds.
Chart 3 Longer term intermarket strength as per the RS matrix is in Metals & Energy.
They are a bit slow to signal so keep in mind the general conditions.
Chart
4 Pharma
index is below its 40-week MA.
Chart
5 Avg. & Median distance of all sectors from their 52-week closing high is
at -2.7% & 0%.
Chart
6 FII flows in Index futures segment are positive and rising.
