Long-term index trend & momentum: February 2018

Friday, 23 February 2018

Sector Momentum Update

Updating the short-term momentum model for the week ending 23^rd February 2018.

Sunday, 18 February 2018

Technicals for week ending – 16th February 2018.

Note : This is not a recommendation and I am not a registered analyst, these are just data points and an assesment of the positives and negatives from a longer term point of view (6-12 months).

Nifty Weekly

After seeing a new all time high almost every week of 2017, seeing some signs now that we are in for a rocky year. I am not a fan of predictions BUT trailing stops for my niftybees position is a bit away and seeing some confluence of supports and data points that warrant caution. To strike a balance between the two the only thing that comes to mind is to sell a little bit now and leave the rest with a trailing stop.

Below I present a few points that resemble what I feel is a perfect storm, again, NOT a fan of predictions but there is this feeling that is just tucking away..

Ok, so firstly (all charts below the write-up), I see Nifty closing in the support band for the week and just above the upward sloping channel connecting the lows since September 2017. Also, the true range based super-trend indicator is just below and a weekly close below this would flip the trend to down. So roughly, a weekly close below 10,350 would break 3 zones : the super-trend indicator, upward sloping demand channel and previous resistance zone from last quarter of 2017 which was around 10,450. Moving on, the damage under the surface is pretty evident with almost 40% of Nifty 500 stocks down more than 20% from their respective 52 week highs. Intraday volatility has increased with increase in number of sessions seeing a more than 1% swing between intraday high-low. After being on the wrong side the whole of 2017, client category turns net long in index futures in 2018 & at the moment hold more long index call options than long puts.

Sector Momentum Update

Updating the short-term momentum model for the week ending 16^nd February 2018.

Sunday, 4 February 2018

Technicals for week ending – 02nd February 2018.

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

Nifty Weekly

Chart 1. For the short term, had mentioned last week that it looks a bit stretched as we had 2 consecutive weekly closes above the standard 20/2 Bollinger Bands. Below is the weekly chart on different timeframes and the 3 week chart looks ominous with that pinbar action. For now, keeping an eye out on 10500 as short-term support. We are in all time high territory so basic logic and common sense says uptrend intact on longer time-frame. The index is still above its rising 40 week moving average – keeping the trailing stops for now. As for underlying stocks from the Nifty 500, less than 20% are trading more than 20% of 52 week highs.

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.