Sector Momentum Model Update

Updating our momentum model for the week ending 25^th Oct 2015.

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

Sector Momentum Model Update

Updating our momentum model for the week ending 18^th Oct 2015.

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

Number of Indices above/below their 40 week moving average.

(Click chart to enlarge)

Technicals for week ending – 11th October 2015.

Nifty weekly

Looking at the weekly charts, we are near the 8200 hurdle and things get very interesting here : 1^st we have a downtrend line from the all-time highs till the August highs, this also coincides with the 40 week moving average. So this zone is going to be real tough to get past through I believe. Also, there is a similar structure on the Bank-Nifty and banks have the largest weightage in the Nifty. From a longer term trend perspective we are still not out of the woods.

The weekly Nifty/bond ratio is still far below its 40 week MA which indicates a more positive outlook for bonds vis-à-vis Nifty.

On the earnings front we are back at the 100% zone for the Nifty-earnings indexed spread and the nifty PE ratio is back above its + 1 SD.

A break above the downtrend lines plus an improvement in earnings would be the best scenario for the longer term picture. Till then it’s better to sit on the side-lines or reduce exposure here.  

Sector Momentum Model Update

Updating our momentum model for the week ending 11^th Oct 2015.

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

Sectors ranked by 52 week rate of change

A simple 52 week rate of change momentum filter could have helped one avoid disasters 

Monthly Models

Updated figures for the equity-bond rotation models as of Sep’15 ending.

I first wrote about these here :

Sector Technical Analysis: Buy & Rotate

Sector Technical Analysis: The Simple strategy…

Both the monthly models are still signalling to stay in bonds. The Buy & Rotate model has performed much better this year with a +2.7% return vs -3.1% for the index fund and much lesser drawdown of just -1% compared to -9% for the index fund. On the other side, the 10 SMA model has been lackluster and had some whipsaw’s over the past few months – YTD returns have been in line with index fund performance.

Buy & Rotate model has been in Bonds since 30 April 2015

10 SMA model has been in Bonds since 31 August 2015

Data & charts for Buy & Rotate model : 

Data & charts for 10 SMA model : 

Technicals for week ending – 27th September 2015

Nifty weekly

The 8100-8200 zone still proving to be a tough one to crack, in addition to this the negative crossover of the 10 & 40 week moving averages is still in play while the 40 week MA is pointing down – this does not bode well for equities from a longer term trend perspective.

Also, the weekly Nifty/bond ratio is still far below its 40 week MA which indicates a more positive outlook for bonds vis-à-vis Nifty.

Now we have the RBI event coming up early in the week but looking at the ratio charts of different sectors looks like the market is positioned defensively as only 4 sector ratio charts are above their 40 week moving average of which 3 are defensive's – Pharma, IT & FMCG.

Ratio charts of defensive sectors :