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November 24, 2024

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Week Ahead: NIFTY Defends This Crucial Support; Chase Rebounds Mindfully

In a truncated trading week, the Indian equities closed the week with gains thanks to a robust technical rebound that it witnessed on Friday. The Nifty continued to wear a corrective look for three days; on the last trading day of the week, the Index managed to get itself into positive territory at close. Had it not been for the technical rebound on Friday, the Index would have been heading to yet another negative weekly close. The trading range stayed wider on the anticipated lines, and the Nifty oscillated in the 692.95 points range over the past four trading sessions. The volatility edged higher; the IndiaVIX surged and closed 8.95% higher at 16.10 on a weekly basis. The headline index closed with a net weekly gain of 374.55 points (+1.59%).

The markets saw some important technical levels getting tested. The Nifty tested and violated the 200-DMA, presently placed at 23593. It also tested the 50-week MA, which is currently at 23312. Thanks to the rebound seen on Friday, the Nifty managed to rebound from these levels and close above the 200-DMA. However, the Nifty is testing the crucial pattern resistance levels and is not entirely out of the woods yet. We also enter the expiry week of the monthly derivative series; the coming days will likely remain influenced by rollover-centric activities. In any case, 23500-23300 is a crucial support zone for the Index; as long as this zone stays defended, we are unlikely to see any further downside. However, if this zone gets violated, we will be in for an extended corrective period.

We are likely to see a stable start for the coming week. The levels of 24150 and 24300 shall act as resistance levels. Supports are likely to come in at 23650 and 23500 levels.

The weekly RSI stands at 47.59; it remains neutral and does not show any divergence against the price. The weekly MACD is bearish and trades below the signal line. The PPO is negative.

The weekly chart pattern analysis indicates that the Nifty is supported by an extended trendline, which aligns with the 50-week moving average currently at 23312. This level is a crucial support for the Nifty, and a breach of this point would weaken the markets further.

Despite a robust technical rebound after testing the 50-week MA, the Nifty is not yet out of the woods. The Nifty will have to defend the 23300 on a closing basis; it will also need to cross above the 24150-24300 to confirm a base formation at the current lows. Market participants need to guard their profits at higher levels. A cautious outlook is advised for the week; keep leveraged exposure at modest levels.

Sector Analysis for the Coming Week

In our look at Relative Rotation Graphs®, we compared various sectors against CNX500 (NIFTY 500 Index), which represents over 95% of the free float market cap of all the stocks listed.

Relative Rotation Graphs (RRG) show a lack of leadership as only Nifty IT, Financial Services, and Services Sector indices are inside the leading quadrant. However, these groups are expected to outperform the broader markets relatively.

The Nifty Pharma Index has rolled inside the weakening quadrant. The Nifty Midcap 100 and Consumption Index are also inside the weakening quadrant.

The FMCG Index has rolled inside the weakening quadrant. The Nifty Auto, Energy, Commodities, PSE, Infrastructure, and Media Indices are inside the weakening quadrant and may relatively underperform the broader markets. However, the PSE and the Infrastructure indices are improving relative momentum against the broader Nifty 500 index.

The Nifty Realty Index has rolled inside the improving quadrant, potentially signaling the onset of a phase of relative outperformance. The Metal, Nifty, Bank, and PSU indices are also in the improving quadrant.

Important Note: RRG charts show the relative strength and momentum of a group of stocks. In the above chart, they show relative performance against NIFTY500 Index (Broader Markets) and should not be used directly as buy or sell signals.

Milan Vaishnav, CMT, MSTA

Consulting Technical Analyst

www.EquityResearch.asia | www.ChartWizard.ae

Small and Mid Caps: Turning Lemons Into Lemonade

No matter how you slice it, small and mid caps have been absolutely crushed on a relative basis since 2021. The unfortunate part about this is that most traders have recency bias. They believe whatever has been working will continue to work and things that haven’t been working should continue to be ignored. If you study stock market history, you know this isn’t how it works.

First, I want you to look at a small cap vs. large cap relative ratio (IWM:SPY) since the turn of the century:

It’s rather clear that small caps have been completely out of favor for the past 3 years. And this is what traders know and remember. But if we step back and look at the Big Picture, then we realize that there are times when small caps absolutely TROUNCE large caps. I believe we’re entering one of those bullish periods and I circled the recent action to illustrate it. While small caps have seen a big jump recently, this charts demonstrates that if this period of small cap leadership is just beginning, things could get VERY exciting into year end and throughout 2025. Shouldn’t we at least entertain this idea? For further confirmation of a major shift into small caps, watch the July relative high near 0.41. If that level is cleared, the odds of a much more significant rotation into small caps increase significantly.

I began discussing small cap outperformance all the way back in January 2024 at our MarketVision 2024 event where I laid out my themes for 2024. I indicated that the Fed’s lowering of the fed funds rate would send the small and mid cap spaces flying, which it has, though it was delayed as a result of the Fed keeping rates “higher for longer”. The stock market began anticipating a much lower fed funds rate back in July, when the June Core CPI came in much better than expected. Small caps RIPPED to the upside with the IWM outperforming the QQQ by 18 percentage points in just a little over two weeks – rapid and violent rotation that, in my opinion, predicted much more rotation to small and mid caps ahead. We’re now seeing that.

At EarningsBeats.com, we “draft” 10 equal-weighted stocks into our portfolios every quarter. At our draft on August 19th, we loaded our Aggressive Portfolio with small and mid cap stocks in anticipation of leadership in those asset classes. Our Aggressive Portfolio results were very impressive:

The S&P 500, from August 19th through the update on November 15th, gained 4.68%, but our Aggressive Portfolio scorched higher by 25.75%. That type of outperformance can make a big difference in your financial future. On Monday night, we announced the stocks that would be part of our Aggressive Portfolio for the next 90 days. Thus far, it’s a small sample, but results have been equally impressive:

After quintupling the S&P 500 in the prior quarter, our Aggressive Portfolio has upped its relative performance and currently is sextupling the S&P 500’s performance. One stock in this portfolio is Lemonade (LMND). When we announced our Aggressive Portfolio stocks that we “drafted” on Monday, LMND had just closed at 34.31. By Thursday, LMND had surged to an intraday high of 52.22, representing more than a 50% move in less than 3 days! While we certainly don’t expect this type of outperformance, it does underscore the possibilities when small and mid caps get on a roll and are seeing money rotate into these asset classes. Another stock in this Portfolio jumped nearly 25% and a couple others had gained more than 10%.

Learn More About Small and Mid Cap Stocks

Last weekend, I offered our FREE EB Digest subscribers a Special Offer. I produced a video highlighting a chart that is SCREAMING at us to buy small and mid cap stocks, along with 10 small and mid cap stocks that I really like. Some of these 10 made it into our Portfolios that were announced on Monday. I’m happy to extend this offer. Anyone that would like a copy of this Small and Mid Cap recording and also would like to see ALL of the stocks that are now in our Portfolios, CLICK HERE to start your 30-day FREE trial to our EB service. There’s a very simple fundamental reason why we’re seeing this shift into small and mid caps and I show you on the Small and Mid Cap recording. If I continue to be correct about this small and mid cap explosion, it’ll likely turn out to be your best decision of 2024. Kick the tires at EarningsBeats.com, check out our small and mid cap favorites, and get ready to improve your trading results!

It’s also the start of our Fall Special. Therefore, signing up for a FREE 30-day trial makes a ton of sense right now. If you like our service, you’ll have the opportunity to save $200 on our annual membership under the Fall Special. An annual membership will include your FREE registration into our MarketVision 2025 event in January, priced at more than $500 for non-members.

YouTube Show

Finally, my weekly market report, “Here’s Why Small and Mid Caps Will Keep Flying!”, was updated earlier and is now available on YouTube. Please “Like” the video and “Subscribe” to our YouTube channel as we continue to build our online community! Thanks so much for your support!

Happy trading!

Tom

Danielle DiMartino Booth: Trump, Powell and US Recession Reality — Where to Focus Now

Weighing in on Fed Chair Jerome Powell’s November 14 comments, she said he remains steadfast in his message that while inflation is coming down to the Fed’s 2 percent target, there’s a bumpy path ahead that will require patience.

‘I think the idea here is not so much to hang onto every single word he’s saying about the economy, but rather to understand that he’s retaining flexibility and does not want to be pigeonholed into saying, ‘Okay, there was one report that came out and therefore we’re going to do this.’ I don’t think that’s his aim,’ DiMartino Booth explained.

In her view, the Fed is likely to cut by another 25 basis points at its next meeting in December.

DiMartino Booth also went over where investors may want to focus their portfolios right now, noting that in the current environment it makes sense to be defensive and protective of assets that generate returns.

‘To the extent that (investors are) going to be exposed to the stock market, they should also be focused on companies that behave like gold — that are defensive in nature, that have really strong cashflow streams and are able to maintain their dividends and provide safe harbor when other riskier asset classes don’t do the same,’ she said.

She added that even though the Fed is lowering rates, there’s a trend of investors turning toward cash.

‘It looks like they’re trying to pare back their risk exposure by increasing their cash holdings despite the fact that they’re getting a lower level of an interest stream off that,’ DiMartino Booth said.

Watch the interview above for more of her thoughts on the Fed, Powell and the outlook for the US economy.

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

This post appeared first on investingnews.com

Doug Casey: Gold to Go Much Higher; “Very Bullish” on Uranium, Oil/Gas, Coal Stocks

He also discussed what he is — and isn’t — doing with his money right now.

‘Stay out of stocks, with a few exceptions here and there — there are always exceptions. Stay out of all bonds, frankly. They’re a triple threat to your capital,’ Casey said during the interview. ‘I still like commodities — commodities relative to everything else are cheap. And gold isn’t particularly cheap, but it’s going a lot higher.’

As the gold price moves up, he sees investors becoming more interested in gold stocks.

“The gold-mining stock market has actually been okay. Not great, but okay to me over the last three or four or five years. But I think that the world will turn, and at some point people are going to say, ‘I’ve got to have these crazy little crappy gold stocks,” Casey explained. ‘And they’ll go 10 to one again like they have as a group, five times actually, since 1971, when gold was freed up — or the dollar was first devalued, I should say — by the Nixon administration.’

Outside of gold, Casey remains interested in oil and gas stocks, as well as coal stocks. He also mentioned uranium as a sector that has his attention, pointing to the coming wave of artificial intelligence data centers that need power.

‘You’ve got to gird your loins, because you don’t know what kind of insanity is going to visit itself upon the world within the next few years. Even if Trump does all the right things — which he won’t, absolutely not — although he’s doing a lot of right things. You want to insulate yourself from what I think will be a gigantic catastrophe that we’re looking at,’ he said. ‘More is better, especially when it comes to money. Especially when that money is in gold.’

Watch the interview above for more from Casey on his current strategies for investing and speculating.

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

This post appeared first on investingnews.com

Amazon to invest another $4 billion in Anthropic, OpenAI’s biggest rival

Amazon on Friday announced it would invest an additional $4 billion in Anthropic, the artificial intelligence startup founded by ex-OpenAI research executives.

The new funding brings the tech giant’s total investment to $8 billion, though Amazon will retain its position as a minority investor, according to Anthropic, the San Francisco-based company behind the Claude chatbot and AI model.

Amazon Web Services will also become Anthropic’s “primary cloud and training partner,” according to a blog post. From now on, Anthropic will use AWS Trainium and Inferentia chips to train and deploy its largest AI models.

Anthropic is the company behind Claude — one of the chatbots that, like OpenAI’s ChatGPT and Google’s Gemini, has exploded in popularity. Startups like Anthropic and OpenAI, alongside tech giants such as Google, Amazon, Microsoft and Meta, are all part of a generative AI arms race to ensure they don’t fall behind in a market predicted to top $1 trillion in revenue within a decade.

Some, like Microsoft and Amazon, are backing generative AI startups with hefty investments as well as working on in-house generative AI.

The partnership announced Friday will also allow AWS customers “early access” to an Anthropic feature: the ability for an AWS customer to do fine-tuning with their own data on Anthropic’s Claude. It’s a unique benefit for AWS customers, according to a company blog post.

In March, Amazon’s $2.75 billion investment in Anthropic was the company’s largest outside investment in its three-decade history. The companies announced an initial $1.25 billion investment in September 2023.

Amazon does not have a seat on Anthropic’s board.

News of Amazon’s additional investment comes one month after Anthropic announced a significant milestone for the company: AI agents that can use a computer to complete complex tasks like a human would.

Anthropic’s new Computer Use capability, part of its two newest AI models, allows its tech to interpret what’s on a computer screen, select buttons, enter text, navigate websites, and execute tasks through any software and real-time internet browsing.

The tool can “use computers in basically the same way that we do,” Jared Kaplan, Anthropic’s chief science officer, told CNBC in an interview last month, adding it can do tasks with “tens or even hundreds of steps.”

Amazon had early access to the tool, Anthropic told CNBC at the time, and early customers and beta testers included Asana, Canva and Notion. The company had been working on the tool since early this year, according to Kaplan.

In September, Anthropic rolled out Claude Enterprise, its biggest new product since its chatbot’s debut, designed for businesses looking to integrate Anthropic’s AI. In June, the company debuted its more powerful AI model, Claude 3.5 Sonnet, and in May, it rolled out its “Team” plan for smaller businesses.

Last year, Google committed to invest $2 billion in Anthropic, after previously confirming it had taken a 10% stake in the startup alongside a large cloud contract between the two companies.

This post appeared first on NBC NEWS