Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning May 05

 

Asset Class	Weekly Level / Change	Implications for S&P 500	Implications for Nifty*
S&P 500	5687, 2.92%	Bullish	Bullish
Nifty	24347, 1.28%	Neutral **	Bullish
China Shanghai Index	3279, -0.49%	Neutral	Neutral
Gold	3257, -1.26%	Bearish	Bearish
WTIC Crude	58.29, -7.51%	Bearish	Bearish
Copper	4.70, -4.02%	Bearish	Bearish
CRB Index	290, -2.73%	Bearish	Bearish
Baltic Dry Index	1421, 3.50%	Bullish	Bullish
Euro	1.1296, -0.61%	Bearish	Bearish
Dollar/Yen	144.95, 0.87%	Bullish	Bullish
Dow Transports	14078, 4.30%	Bullish	Bullish
Corporate Bonds (ETF)	106.91, -1.00%	Bearish	Bearish
High-Yield Bonds (ETF)	94.57, -0.47%	Neutral	Neutral
US 10-year Bond Yield	4.31%, 1.25%	Bearish	Bearish
NYSE Summation Index	113, 141%	Bullish	Neutral
US Vix	22.68, -21.06%	Bullish	Neutral
S&P 500 Skew	135	Neutral	Neutral
CNN Fear & Greed Index	Greed	Bearish	Neutral
Nifty MMI Index	Greed	Neutral	Bearish
20 DMA, S&P 500	5368, Above	Bullish	Neutral
50 DMA, S&P 500	5583, Above	Bullish	Neutral
200 DMA, S&P 500	5746, Below	Bearish	Neutral
20 DMA, Nifty	23572, Above	Neutral	Bullish
50 DMA, Nifty	23118, Above	Neutral	Bullish
200 DMA, Nifty	24056, Above	Neutral	Bullish
S&P 500 P/E	28.37	Bearish	Neutral
Nifty P/E	21.95	Neutral	Bearish
India Vix	18.26, 6.41%	Neutral	Bearish
Dollar/Rupee	84.53, -1.00%	Neutral	Bullish
Overall	S&P 500	Nifty
Bullish Indications	8	9
Bearish Indications	10	10
Outlook	Bearish	Bearish
Observation	The S&P and the Nifty rose last week. Indicators are bearish for the week. Markets are topping. Watch those stops.
On the Horizon	US – FOMC rate decision , UK – BOE rate decision
*Nifty	India’s Benchmark Stock Market Index
Raw Data	Data courtesy stockcharts.com, investing.com, multpl.com, nseindia.com, tickertape.in
**Neutral	Changes less than 0.5% are considered neutral

 

The S&P and the Nifty rose last week. Indicators are bearish for the week. Markets have topped, and the bottom of this leg will likely be revisited near 4800 soon. We are transitioning into a deflationary regime. The sentiment is greedy. Carry trade liquidation has resumed, and the S&P is below the 200 DMA near 5750. The macro-environment was rapidly deteriorating even before these latest rounds of tariffs. The recent massive breakdown in transports is quite ominous. This, combined with oil's free fall, has profound recessionary implications. The Nifty has corrected significantly from recent highs and will likely end its outperformance soon. The 200 DMAs of most global indices have started declining after almost 4 years, and volatility indices are about to exhibit golden crosses in their weekly MAs.

The past week saw US equity markets rise. Most emerging markets rose even as interest rates rose. Transports rallied. The Baltic dry index rose. The dollar was unchanged. Commodities fell. Valuations are expensive, market breadth rebounded, and the sentiment is greedy. Volatility (S&P 500) retraced lower.

A currency crisis should resume and push risky assets to new lows. Deflation is in the air, and bonds are telegraphing just that despite intermittent spikes in yields. It feels like a 2008-style recession trade has begun, with a potential for a decline in risk assets across the board. The current market is tracking closely the 2000 moves down in the S&P 500, implying a panic low right ahead in the upcoming months (My views do not matter; kindly pay attention to the levels). A dollar rally is a likely catalyst.

The S&P 500 is correcting from recent highs. We have bounced from recent lows without capitulation. This suggests the lows may not be in, and the regime has changed from buying the dip to selling the rip. We may get a final flush down soon. Risky assets should continue breaking to the downside as earnings growth falters. The Fed has aggressively tightened into a recession. Deflationary busts often begin after major inflationary scares. The Dollar, commodities, and bond yields are flashing significant warning signs.

Global yield curves have inverted a second time after the recent steepening, reflecting the arrival of a significant economic slowdown. Following the recent steepening of the yield curve after the first inversion, this second inversion is a precursor to the next recession, and the riskiest assets will underperform going forward under such conditions. 

The critical levels to watch for the week are 5700 (up) and 5675 (down) on the S&P 500 and 24450 (up) and 24250 (down) on the Nifty. A significant breach of the above levels could trigger the next big move in the above markets.  High beta / P/E will get torched again and is a sell on every rise. Gold increasingly looks like the asset class to own over the next decade (currently going parabolic). Gold exploded almost eight times higher over the decade following the dot-com bust in 2000. Imagine what would happen to gold as this AI bubble bursts. You can check out last week’s report for a comparison. I love your thoughts and feedback.

 

 

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning April 28

 

Asset Class	Weekly Level / Change	Implications for S&P 500	Implications for Nifty*
S&P 500	5525, 4.59%	Bullish	Bullish
Nifty	24039, 0.79%	Neutral **	Bullish
China Shanghai Index	3295, 0.56%	Bullish	Bullish
Gold	3298, -0.90%	Bearish	Bearish
WTIC Crude	63.02, -2.57%	Bearish	Bearish
Copper	4.90, 3.29%	Bullish	Bullish
CRB Index	299, 0.70%	Bullish	Bullish
Baltic Dry Index	1373, 10.64%	Bullish	Bullish
Euro	1.1364, -0.24%	Neutral	Neutral
Dollar/Yen	143.67, 1.06%	Bullish	Bullish
Dow Transports	13497, 0.43%	Neutral	Neutral
Corporate Bonds (ETF)	107.99, 1.16%	Bullish	Bullish
High-Yield Bonds (ETF)	95.02, 1.39%	Bullish	Bullish
US 10-year Bond Yield	4.25%, -1.79%	Bullish	Bullish
NYSE Summation Index	-280, 48%	Bullish	Neutral
US Vix	24.84, -21.06%	Bullish	Neutral
S&P 500 Skew	132	Neutral	Neutral
CNN Fear & Greed Index	Fear	Bullish	Neutral
Nifty MMI Index	Greed	Neutral	Bearish
20 DMA, S&P 500	5365, Above	Bullish	Neutral
50 DMA, S&P 500	5636, Below	Bearish	Neutral
200 DMA, S&P 500	5747, Below	Bearish	Neutral
20 DMA, Nifty	23419, Above	Neutral	Bullish
50 DMA, Nifty	23032, Above	Neutral	Bullish
200 DMA, Nifty	24055, Below	Neutral	Bearish
S&P 500 P/E	27.54	Bearish	Neutral
Nifty P/E	21.72	Neutral	Bearish
India Vix	17.16, 10.93%	Neutral	Bearish
Dollar/Rupee	85.38, -0.06%	Neutral	Neutral
Overall	S&P 500	Nifty
Bullish Indications	13	12
Bearish Indications	5	6
Outlook	Bullish	Bullish
Observation	The S&P and the Nifty rose last week. Indicators are bullish for the week. Markets are topping. Watch those stops.
On the Horizon	US – Employment data, Eurozone – CPI, German GDP, Japan – BOJ rate decision
*Nifty	India’s Benchmark Stock Market Index
Raw Data	Data courtesy stockcharts.com, investing.com, multpl.com, nseindia.com, tickertape.in
**Neutral	Changes less than 0.5% are considered neutral

 

The S&P and the Nifty rose last week. Indicators are bullish for the week. Markets have topped, and the bottom of this leg will likely be revisited near 4800 soon. We are transitioning into a deflationary regime. The sentiment is fearful. Carry trade liquidation has resumed as the S&P is below the 200 DMA near 5750. The macro-environment was rapidly deteriorating even before these latest rounds of tariffs. The recent massive breakdown in transports is quite ominous, with profound recessionary implications. The Nifty has corrected significantly from recent highs and will likely end its outperformance soon. The 200 DMAs of most global indices have started declining after almost 4 years, and volatility indices are about to exhibit golden crosses in their weekly MAs.

The past week saw US equity markets rise. Most emerging markets rose as interest rates fell. Transports were unchanged. The Baltic dry index rose. The dollar was unchanged. Commodities rose. Valuations are expensive, market breadth rebounded, and the sentiment is fearful. Volatility (S&P 500) retraced lower.

A currency crisis should resume and push risky assets to new lows. Deflation is in the air, and bonds are telegraphing just that. It feels like a 2008-style recession trade has begun, with a potential for a decline in risk assets across the board. The current market is tracking closely the 2000 moves down in the S&P 500, implying a panic low right ahead in the upcoming months (My views do not matter; kindly pay attention to the levels). A dollar rally is a likely catalyst.

The S&P 500 is correcting from recent highs. We have bounced from recent lows without capitulation. This suggests the lows may not be in, and the regime has changed from buying the dip to selling the rip. We may get a final flush down soon. Risky assets should continue breaking to the downside as earnings growth falters. The Fed has aggressively tightened into a recession. Deflationary busts often begin after major inflationary scares. The Dollar, commodities, and bond yields are flashing significant warning signs.

Global yield curves have inverted a second time after the recent steepening, reflecting the arrival of a significant economic slowdown. Following the recent steepening of the yield curve after the first inversion, this second inversion is a precursor to the next recession, and the riskiest assets will underperform going forward under such conditions. 

The critical levels to watch for the week are 5540 (up) and 5510 (down) on the S&P 500 and 24100 (up) and 23950 (down) on the Nifty. A significant breach of the above levels could trigger the next big move in the above markets.  High beta / P/E will get torched again and is a sell on every rise. Gold increasingly looks like the asset class to own over the next decade (currently going parabolic). Gold exploded almost eight times higher over the decade following the dot-com bust in 2000. Imagine what would happen to gold as this AI bubble bursts. You can check out last week’s report for a comparison. I love your thoughts and feedback.