The first month of the year is turning out very different than the last month. We still have 5 trading sessions in the month, but so far it is looking promising for the U.S. markets. The S&P 500 has returned 6.25% as of early trading on Friday morning, while the Dow Jones Industrial Average is up 6.29% and the tech heavy NASDAQ has increased the most at 7.53% for the same time period.
Looking outside of the U.S. we are observing a technical shift in the Nifty 50 Index in India. Chart technicians pay attention to moving average crosses along with daily high/low and closing prices. What we’ve seen is that the Nifty 50 Index has been displaying a bullish trend over the last few months. One sign that bulls are dominating the market is by paying attention to the lows of the index. If the market has been registering higher and higher lows, that is seen as an optimistic sign.
Technicians pay attention to many indicators and not just one, so we will be looking at how the 50-day simple moving average behaves in relation to the 200-day simple moving average. If we see the 50-day average cross the 200-day average, that will be another indicator in favor of the bulls.
At Surevest, we rely on fundamental analysis, both qualitative and quantitative, to guide us in our investment decisions. However, we do not neglect technical analysis because many market participants trade based on this technique.
Our strategy has some exposure to India, and we view this investment as playing a structural part in our thesis. In other words, we are not looking to trade in/out of our exposure and see it as a long-term investment that we expect to pay off, albeit with a bumpy ride.