Before we start, full disclosure –
that I follow a weekly model like a robot, it is currently in buy mode. Hence,
the below observations are just somethings that caught my eye and thought to
share.
First up we have the Nifty index
chart with Bollinger bands set to 200 day and 2 standard deviations. The green
arrows were days when the close was above the upper band. Not many instances
since 2009 but except for the 2014 election rally and the breakout in 2017 all
other occurrences saw lacklustre returns in the following months.
Next, let’s look at the relative
strength of the broader indices vs. the 10-year bond index. While it is very
clear that broader markets are under performing Nifty…but they are under
performing bonds as well. As we can see from the below charts, except the Nifty
500/ Bonds relative strength chart, all other ratios are below their respective
40 week moving averages and the averages are trending down for all ratios.
Again, not many instances in the past but such scenarios occurred during
periods of general equity weakness.
Lastly, we track all the major
indices if they are above or below their own 40 week moving average. From the
below chart we can see general equity strength when most (let’s say 7) of the
broader & sector indices are above their moving average. As of today, we
are middling but Nifty seems to be on its way to the moon LOL.
