Five Chart Sunday – Most Important Charts that will indicate the Next Trending Move !!
The World has been in a Kangaroo Market for last many weeks.
So when does this trend change.
Lets look at the 5 charts which may give early Indications.
1) The Dollar Index
Some of the major Bullish Markets have happened with a downtrend in Dollar Index.
The 2003-2007 Bull Market across the world.
The 2017 year where none of the world indices dropped more than 10% a year and all indices did well.
The 2020 covid peak and a clean bullish move without much of a correction.
Dollar Index has made a short term top. Whether its made a very important long term top is early to say.
The pivot now is 98-100 Dollar Index.
2) Dow Jones Industrial Average
Given that a cyclical top is in place for the Tech Sector it becomes more important to look at Dow Jones alongwith?S&P 500 and not focus much on Nasdaq 100. European Indices have done better in near term as hardly and Tech weights.
Dow Jones has made multiple attempts at the 34300-34700 mark in last many months. Generally positive when many such attempts happen. Eventually can breakout.
32500-32700 remains the decider to whether it goes to an all time high or drifts back lower.
3) Gold – Long Term Chart
Generally not a chart which one looks at to take a call on Equities but some of the best moves in Gold have happened in a tough Global Environment.
For example 2008 to 2011 was the best period for it. Its been tough to cross that top on a sustainable basis till today.
Gold has again come close to knocking at that 1950-2050 mark.
A Breakout above 2000-2050 band would indicate a tough Global Environment. Athough the last candle suggests a possible top in making.
The Indian Index Heavyweights.
I continue to prefer the route of looking at Nifty 50 with a focus on its constituents and not just the Index Chart.
A guess on the?NiftyCalculator?or looking at Sectoral Changes has given us more Insights.
For example the Bank Nifty report we came out at 32500 in June 2022 could not have been better timed. Bank Nifty did 44k after that and still pretty strong.
We highlighted many reasons for the Banks to become new leaders but one simple one was.
Bank Nifty in June 2022 was at an equivalent of 12000-12500 Nifty.?( The most bearish voices had that as a target and Banks which are 25% and including financials more than 30% of Nifty was already there.)
Do read the older report.?https://nooreshtech.co.in/2022/06/future-of-nifty50-banking-on-banks-free-detailed-presentation.html?
Now we look at two stocks which could really define what Nifty50 does next.
Reliance Industries = 10.4% weight in Nifty. HDFC Bank 9% weight in Nifty but given HDFC merger approved. The twins weigh 15% of Nifty.
Simply put Reliance Inds and HDFC group is 25% of Nifty.
Both have underperformed in last 2 years.
4) Reliance Inds
After most of the Fund Raising in 2020 the Stock peaked at 2300 odd levels.
In the last 1 year with Russia Ukraine, Windfall Tax it has held on to the support of 2250-2350.
Will it flip back to 2750 or breakdown?
5) HDFC Bank
Peaked in January 2021 around 1640 and Oct 21 around 1700.
领英推è
Merger announcement date the peak was 1700-1725.
In the last few months the zone of 1650-1725 has been a resistance.
The last range of 2 years is 1300-1700. Technically a breakout implies a target of 2100 or more.
The recent lows at 1500-1550 the price below which trend changes. Till then HDFC Bank looks positively biased.
The only other Index I would be looking out for is the BSE Smallcap Index. That needs to confirm a trend breakout alongwith the above.
Conclusions
The Bias is clearly Positive for India.?The 1 year the Index has been sideways but there were many opportunities in specific stocks/sectors.?
Above 5 charts will ideally signal you the Momentum Push.
Smallcaps/Midcaps continue to look more interesting.
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2 å¹´Gold correlation is interesting, in 2011 gold in Rupee terms was 27,000 in Doller terms USD 2011, today Gold in USD is 1850/Oz odd and in Rupee terms its 56K. Most people do not understand the currency correlation and its impact on Economy or Financial Markets. (impact on personal finance as well).