Indicator |
Weekly
Level / Change |
Implication
for S
& P 500 |
Implication
for Nifty* |
S
& P 500 |
3901,
- 3.05% |
Bearish |
Bearish |
Nifty |
16266,
3.07% |
Neutral
** |
Bullish |
China
Shanghai Index |
3147,
2.02% |
Bullish |
Bullish |
Gold |
1845,
2.04% |
Bullish |
Bullish |
WTIC
Crude |
110.35,
- 0.13% |
Neutral |
Neutral |
Copper |
4.30,
3.09% |
Bullish |
Bullish |
Baltic
Dry Index |
3344,
7.73% |
Bullish |
Bullish |
Euro |
1.0562,
1.45% |
Bullish |
Bullish |
Dollar/Yen |
127.86,
- 1.03% |
Bearish |
Bearish |
Dow
Transports |
13491,
-6.68% |
Bearish |
Bearish |
Corporate
Bonds (ETF) |
112.42,
0.69% |
Bullish |
Bullish |
High
Yield Bonds (ETF) |
94.70,
- 0.51% |
Bearish |
Bearish |
US 10-year
Bond Yield |
2.79%,
- 5.24% |
Bullish |
Bullish |
NYSE
Summation Index |
-847,
1.1% |
Bullish |
Neutral |
US
Vix |
29.43,
1.94% |
Bearish |
Bearish |
Skew |
122 |
Neutral |
Neutral |
CNN
Fear & Greed |
Extreme
Fear |
Bullish |
Bullish |
20
DMA, S & P 500 |
4084,
Below |
Bearish |
Neutral |
50
DMA, S & P 500 |
4303,
Below |
Bearish |
Neutral |
200
DMA, S & P 500 |
4467,
Below |
Bearish |
Neutral |
20
DMA, Nifty |
16514,
Below |
Neutral |
Bearish |
50
DMA, Nifty |
16949,
Below |
Neutral |
Bearish |
200
DMA, Nifty |
17248,
Below |
Neutral |
Bearish |
S
& P 500 P/E |
19.72 |
Bearish |
Neutral |
Nifty
P/E |
20.05 |
Neutral |
Bearish |
India
Vix |
23.10,
- 1.64% |
Neutral |
Bullish |
Dollar/Rupee |
77.82,
0.45% |
Neutral |
Neutral |
Overall |
S
& P 500 |
Nifty |
|
Bullish
Indications |
9 |
10 |
|
Bearish
Indications |
9 |
9 |
|
Outlook |
Neutral |
Bullish |
|
Observation |
The S and P fell and the Nifty rallied last week.
Indicators are mixed for the week. The
markets are correcting. Watch those stops. |
||
On
the Horizon |
US
– GDP, FOMC
minutes, Eurozone – German 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 |
The S and P fell and
the Nifty rallied last week. Indicators are mixed for the week. Deflation is in the
air despite the recent inflationary spike and the Chinese Yuan is
telegraphing just that. Feels like a 2000-style recession trade has begun,
with a decline in risk assets across the board. (My views
don’t matter, kindly pay attention to the levels). The S&P 500 closed
below the 200 DMA recently, after spending a very long time above it, and its
200 DMA has started to decline. Monthly MACDs on most global
markets have gone negative after quite a long time. This spells trouble ahead
and opens up significant downside risk ahead. We likely have a short-term
bottom near the 3800 mark on the S & P, though no panic yet. Once
a meaningful bottom is made a 250-point rally on the S & P 500 is
likely.
We have
got bounces without capitulation. This suggests the lows may not be in and the regime is
changing from buy the dip to sell the rip. Risky assets are breaking to the
downside across the board. Earnings revisions have been average, but any significant
upward revisions appear unlikely. Typical late-cycle FED put stuff has
led to a taper tantrum following the recent taper announcement
from the FED and a likely top. Tail risk has
skyrocketed recently. The market is about to begin an epic correction.
Deflationary busts often begin after major inflationary scares.
The transports
led the most recent rebound and are starting to lead the next decline, The Dollar,
market breadth, and bond yields are continuing to flash major warning signs. The epic
correction signal occurred with retail, hedge funds, and speculators all in, in
the recent melt-up in January, suggesting a major top may be in. The
moment of reckoning is here. Technicals are tracking fundamentals
and have recently turned bearish. With extremely high valuations, a crash is on
the menu. Extremely low volatility suggests complacency and downside ahead.
We
rallied 46% right after the Great Depression (1930s) first collapse and we
have rallied over 120% in our most recent rally of the lows in the last 2-year
period. After extreme euphoria for the indices, a highly probable selloff to
the 3700 area is emerging on the S and P, and 15000 should arrive on the Nifty
in the next few weeks. The FED is repeating the Japan experiment and the 3 lost
decades in Japan (1989-2019) are set to repeat across the globe.
The
trend has changed from bullish to bearish and the markets are about to get a
reality check and get smashed by a strong dollar. Looking for
significant underperformance in the Nifty going forward on rapidly
deteriorating macros.
Yield
curves are about to invert yet again reflecting a major upcoming recession. The
critical levels to watch for the week are 3915 (up) and 3885
(down) on the S & P 500 and 16350 (up) and 16200 (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 is getting torched yet
again. Gold is increasingly looking like the asset class to own in
the upcoming decade despite the recent selloff. You can check out last week’s report for a comparison. Love your thoughts
and feedback.
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