Mid Week Market Insight

Markets are at record highs. Valuations appear to be stretched. Here is the latest on valuations from some of the best asset managers, market commentators, financial analysts and CMT's of today:

Valuations

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning August 27

Indicator	Weekly Level / Change	Implication for S & P 500	Implication for Nifty*
S & P 500	2875, 0.86%	Bullish	Neutral
Nifty	11557, 0.75%	Neutral **	Bullish
China Shanghai Index	2729, 2.27%	Bullish	Bullish
Gold	1213, 2.46%	Bullish	Bullish
WTIC Crude	68.72, 5.38%	Bullish	Bullish
Copper	2.70, 2.72%	Bullish	Bullish
Baltic Dry Index	1697, -1.51%	Bearish	Bearish
Euro	1.1621, 1.54%	Bullish	Bullish
Dollar/Yen	111.17, 0.54%	Bullish	Bullish
Dow Transports	11285, 0.51%	Bullish	Bullish
High Yield (ETF)	36.01, 0.42%	Neutral	Neutral
US 10 year Bond Yield	2.83%, -1.64%	Bullish	Bullish
Nyse Summation Index	559, 30.98%	Bullish	Neutral
US Vix	11.99, -5.14%	Bullish	Bullish
Skew	148	Bearish	Bearish
20 DMA, S and P 500	2842, Above	Bullish	Neutral
50 DMA, S and P 500	2801, Above	Bullish	Neutral
200 DMA, S and P 500	2722, Above	Bullish	Neutral
20 DMA, Nifty	11406, Above	Neutral	Bullish
50 DMA, Nifty	11075, Above	Neutral	Bullish
200 DMA, Nifty	10641, Above	Neutral	Bullish
India Vix	12.41, -5.72%	Neutral	Bullish
Dollar/Rupee	69.75, -0.04%	Neutral	Neutral
Overall	S & P 500	Nifty
Bullish Indications	14	14
Bearish Indications	2	2
Outlook	Bullish	Bullish
Observation	The S and P 500 was and the Nifty were up last week. Indicators are bullish. The markets are close to making secondary tops. Watch those stops.
On the Horizon	Euro Zone – CPI, German employment data, U.S – GDP, Canada – GDP
*Nifty	India’s Benchmark Stock Market Index
Raw Data	Courtesy Google finance, Stock charts, investing.com
**Neutral	Changes less than 0.5% are considered neutral

The S and P 500 and the Nifty were up last week. Indicators are bullish for the upcoming week. This rally is close to a major secondary top in key asset classes which has already formed in the Euro and commodities. This is going to be followed by a massive selloff most likely a deflationary collapse. Quantitative tightening by the FED is yet to be priced in fully. The markets are still trading well over 3 standard deviations above their long term averages from which corrections usually result. Tail risk is also very high. The critical levels to watch for the week are 2885 (up) and 2865 (down) on the S & P 500 and 11650 (up) and 11450 (down) on the Nifty. A significant breach of the above levels could trigger the next big move in the above markets. You can check out last week’s report for a comparison. Love your thoughts and feedback.

Mid Week Market Insight

The contagion in Turkey appears to be spreading to Brazil, with the Brazilian Real hitting new lows. The US economy continues to hum along with rate hikes on track despite emerging market woes and the strong dollar. The US markets continue to trade near record highs despite developing divergences. These and other stories from some of the best asset managers, market commentators, financial analysts and CMT's of today:

Economy Emerging Markets Crisis Stock Markets

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning August 20

Indicator	Weekly Level / Change	Implication for S & P 500	Implication for Nifty*
S & P 500	2850, 0.59%	Bullish	Neutral
Nifty	11471, 0.36%	Neutral **	Neutral
China Shanghai Index	2669, -4.52%	Bearish	Bearish
Gold	1184, -2.85%	Bearish	Bearish
WTIC Crude	65.21, -3.58%	Bearish	Bearish
Copper	2.63, -4.14%	Bearish	Bearish
Baltic Dry Index	1723, 1.89%	Bullish	Bullish
Euro	1.1444, 0.24%	Neutral	Neutral
Dollar/Yen	110.57, -0.26%	Neutral	Neutral
Dow Transports	11228, 1.24%	Bullish	Bullish
High Yield (ETF)	35.86, 0.14%	Neutral	Neutral
US 10 year Bond Yield	2.87%, 0.56%	Bearish	Bearish
Nyse Summation Index	427, -13.34%	Bearish	Neutral
US Vix	12.64, -3.95%	Bullish	Bullish
Skew	146	Bearish	Bearish
20 DMA, S and P 500	2833, Above	Bullish	Neutral
50 DMA, S and P 500	2793, Above	Bullish	Neutral
200 DMA, S and P 500	2715, Above	Bullish	Neutral
20 DMA, Nifty	11310, Above	Neutral	Bullish
50 DMA, Nifty	11015, Above	Neutral	Bullish
200 DMA, Nifty	10619, Above	Neutral	Bullish
India Vix	13.16, 2.41%	Neutral	Bearish
Dollar/Rupee	69.78, 1.01%	Neutral	Bearish
Overall	S & P 500	Nifty
Bullish Indications	7	6
Bearish Indications	7	8
Outlook	Neutral	Bearish
Observation	The S and P 500 was and the Nifty were up last week. Indicators are mixed. The markets are close to making secondary tops. Watch those stops.
On the Horizon	Euro Zone – German GDP, U.S – FED Speak, Canada – Retail sales
*Nifty	India’s Benchmark Stock Market Index
Raw Data	Courtesy Google finance, Stock charts, investing.com
**Neutral	Changes less than 0.5% are considered neutral

The S and P 500 and the Nifty were up last week. Indicators are mixed for the upcoming week. This rally is close to a major secondary top in key asset classes which is going to be followed by a massive selloff most likely a deflationary collapse. Quantitative tightening by the FED is yet to be priced in fully. The markets are still trading well over 3 standard deviations above their long term averages from which corrections usually result. Tail risk is also very high. The critical levels to watch for the week are 2860 (up) and 2840 (down) on the S & P 500 and 11550 (up) and 11400 (down) on the Nifty. A significant breach of the above levels could trigger the next big move in the above markets. You can check out last week’s report for a comparison. Love your thoughts and feedback.