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Ahead of the Curve provides you with analysis and insight into today's global financial markets. The latest news and views from global stock, bond, commodity and FOREX markets are discussed. Rajveer Rawlin is a PhD and received his MBA in finance from the Cardiff Metropolitan University, Wales, UK. He is an avid market watcher having followed capital markets in the US and India since 1993. His research interests includes areas of Capital Markets, Banking, Investment Analysis and Portfolio Management and has over 20 years of experience in the above areas covering the US and Indian Markets. He has several publications in the above areas. The views expressed here are his own and should not be construed as advice to buy or sell securities.

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Sunday 24 May 2020

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning May 25

Indicator
Weekly Level / Change
Implication for
S & P 500
Implication for Nifty*
S & P 500
2956, 3.20%
Bullish
Bullish
Nifty
9039, -1.07%
Neutral **
Bearish
China Shanghai Index
2814, -1.91%
Bearish
Bearish
Gold
1735, -1.23%
Bearish
Bearish
WTIC Crude
33.41, 13.52%
Bullish
Bullish
Copper
2.39, 2.64%
Bullish
Bullish
Baltic Dry Index
494, 21.38%
Bullish
Bullish
Euro
1.0903, 0.80%
Bullish
Bullish
Dollar/Yen
107.63, 0.56%
Bullish
Bullish
Dow Transports
8470, 9.14%
Bullish
Bullish
High Yield (Bond ETF)
100.29, 3.25%
Bullish
Bullish
US 10 year Bond Yield
0.66%, 2.21%
Bearish
Bearish
Nyse Summation Index
197, 148.78%
Bullish
Neutral
US Vix
28.16, -11.70%
Bullish
Bullish
Skew
126
Neutral
Neutral
20 DMA, S and P 500
2894, Above
Bullish
Neutral
50 DMA, S and P 500
2732, Above
Bullish
Neutral
200 DMA, S and P 500
3000, Below
Bearish
Neutral
20 DMA, Nifty
9223, Below
Neutral
Bearish
50 DMA, Nifty
9068, Below
Neutral
Bearish
200 DMA, Nifty
11019, Below
Neutral
Bearish
S & P 500 P/E
20.53
Bearish
Neutral
Nifty P/E
21.19
Neutral
Bearish
India Vix
32.38, -14.84%
Neutral
Bullish
Dollar/Rupee
75.95, 0.16%
Neutral
Neutral


Overall


S & P 500


Nifty

Bullish Indications
13
10
Bearish Indications
5
8
Outlook
Bullish
Bullish
Observation
The S and P 500 was up and the Nifty fell last week. Indicators are bullish for the week.
The markets have begun a great depression style collapse. Watch those stops.
On the Horizon
Eurozone – German GDP, CPI,  US – GDP
*Nifty
India’s Benchmark Stock Market Index
Raw Data
Courtesy Stock charts, investing.com, multpl.com, NSE
**Neutral
Changes less than 0.5% are considered neutral


stock market signals may 25


The S and P 500 rallied and the Nifty fell last week. Indicators are bullish for the coming week. The markets are very close to an epic melt down and the SPX is headed to 1800 in the medium term. Markets are overvalued, overbought and out of touch with economic realities. Long term, the epic meltdown is set to continue resulting in a 5 year plus bear market with lot lower levels maybe as low as 800 on the S and P. QE forever from the FED is about to trigger the deflationary collapse of the century and we have made a major top in global equity markets. The market is looking like the short of a life time with non-conformations from the transports, other global indices and commodities. High valuations continue. The breakdown in Crude and the Euro is a precursor to yet another massive drop in the S and P 500. The recent global virus epidemic (black swan) is likely to dent global GDP significantly and usher in a depression much faster than most think. The trend has changed from bullish to bearish and the markets are getting smashed by a strong dollar. Looking for significant under performance in the Nifty going forward on rapidly deteriorating macros. A 5 year deflationary wave has started in key asset classes like the Euro, stocks and commodities amidst a number of bearish divergences and over stretched valuations. We are entering a multi-year great depression. The markets are still trading well over 3 standard deviations above their long term averages from which corrections usually result. Tail risk has been very high off late as the yield curve inverts into a recession. The critical levels to watch for the week are 2970 (up) and 2945 (down) on the S & P 500 and 9200 (up) and 8950 (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.



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