Indicator |
Weekly Level / Change |
Implication for S & P 500 |
Implication for Nifty* |
S & P 500 |
3901, - 5.05% |
Bearish |
Bearish |
Nifty |
16202, - 2.31% |
Neutral ** |
Bearish |
China Shanghai Index |
3285, 2.80% |
Bullish |
Bullish |
Gold |
1875, 1.35% |
Bullish |
Bullish |
WTIC Crude |
120.47, 1.35% |
Bullish |
Bullish |
Copper |
4.28, - 4.23% |
Bearish |
Bearish |
Baltic Dry Index |
2320, -11.89% |
Bearish |
Bearish |
Euro |
1.0517, - 1.88% |
Bearish |
Bearish |
Dollar/Yen |
134.40, 2.71% |
Bullish |
Bullish |
Dow Transports |
13369, - 7.45% |
Bearish |
Bearish |
Corporate Bonds (ETF) |
110.52, - 2.36% |
Bearish |
Bearish |
High Yield Bonds (ETF) |
93.53, - 3.94% |
Bearish |
Bearish |
US 10-year Bond Yield |
3.17%, 7.77% |
Bearish |
Bearish |
NYSE Summation Index |
-219, 29% |
Bullish |
Neutral |
US Vix |
27.75, 11.94% |
Bearish |
Bearish |
Skew |
122 |
Neutral |
Neutral |
CNN Fear & Greed |
Fear |
Bullish |
Bullish |
20 DMA, S & P 500 |
4040, Below |
Bearish |
Neutral |
50 DMA, S & P 500 |
4198, Below |
Bearish |
Neutral |
200 DMA, S & P 500 |
4440, Below |
Bearish |
Neutral |
20 DMA, Nifty |
16315, Below |
Neutral |
Bearish |
50 DMA, Nifty |
16788, Below |
Neutral |
Bearish |
200 DMA, Nifty |
17258, Below |
Neutral |
Bearish |
S & P 500 P/E |
19.71 |
Bearish |
Neutral |
Nifty P/E |
20.05 |
Neutral |
Bearish |
India Vix |
19.58, - 2.00% |
Neutral |
Bullish |
Dollar/Rupee |
78.18, 0.75% |
Neutral |
Bearish |
Overall |
S & P 500 |
Nifty |
|
Bullish Indications |
6 |
6 |
|
Bearish Indications |
13 |
15 |
|
Outlook |
Bearish |
Bearish |
|
Observation |
The S and P and the Nifty fell last
week. Indicators are bearish for the week. The markets are correcting. Watch those stops. |
||
On the Horizon |
US – PPI, FOMC rate decision, Eurozone –CPI, UK
– GDP, Employment data, BOE rate decision, Japan - BOJ rate decision |
||
*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
and the Nifty fell last week. Indicators are bearish for the
week. This week has severe market crash implications. 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 is
well below the 200 DMA, after spending a long time above it, and its 200
DMA is declining. Monthly MACDs on most global markets
have gone negative after a long time. This spells trouble
ahead and opens up significant downside risk ahead. We got the 250-point
rally in the S & P 500 and are headed back to new lows.
We have got
bounces without capitulation. This suggests the lows may not be in
and the regime is changing from but 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 despite the recent counter-trend move.
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 (the 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 3600 area is emerging on the S and P, and 15000 should arrive on the Nifty in the next few months. 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 3890 (down) on
the S & P 500 and 16300 (up) and 16100 (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 and will likely prove to be a sell on every rise. 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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