Indicator |
Weekly Level / Change |
Implication for S & P 500 |
Implication for Nifty* |
S & P 500 |
3675, - 5.79% |
Bearish |
Bearish |
Nifty |
15294, - 5.61% |
Neutral ** |
Bearish |
China Shanghai Index |
3317, 0.97% |
Bullish |
Bullish |
Gold |
1842, - 1.79% |
Bearish |
Bearish |
WTIC Crude |
107.99, - 10.51% |
Bearish |
Bearish |
Copper |
4.01, - 6.60% |
Bearish |
Bearish |
Baltic Dry Index |
2578, 11.12% |
Bullish |
Bullish |
Euro |
1.0500, - 0.14% |
Neutral |
Neutral |
Dollar/Yen |
134.96, 0.40% |
Neutral |
Neutral |
Dow Transports |
12869, - 3.74% |
Bearish |
Bearish |
Corporate Bonds (ETF) |
109.43, - 0.99% |
Bearish |
Bearish |
High Yield Bonds (ETF) |
91.64, - 2.02% |
Bearish |
Bearish |
US 10-year Bond Yield |
3.23%, 1.79% |
Bearish |
Bearish |
NYSE Summation Index |
-538, - 145% |
Bearish |
Neutral |
US Vix |
31.13, 12.18% |
Bearish |
Bearish |
Skew |
121 |
Neutral |
Neutral |
CNN Fear & Greed |
Extreme Fear |
Bullish |
Bullish |
20 DMA, S & P 500 |
3973, Below |
Bearish |
Neutral |
50 DMA, S & P 500 |
4117, Below |
Bearish |
Neutral |
200 DMA, S & P 500 |
4421, Below |
Bearish |
Neutral |
20 DMA, Nifty |
16187, Below |
Neutral |
Bearish |
50 DMA, Nifty |
16572, Below |
Neutral |
Bearish |
200 DMA, Nifty |
17233, Below |
Neutral |
Bearish |
S & P 500 P/E |
18.57 |
Bearish |
Neutral |
Nifty P/E |
18.92 |
Neutral |
Bearish |
India Vix |
22.76, 16.26% |
Neutral |
Bearish |
Dollar/Rupee |
77.96, - 0.20% |
Neutral |
Neutral |
Overall |
S & P 500 |
Nifty |
|
Bullish Indications |
3 |
3 |
|
Bearish Indications |
14 |
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 |
UK – CPI, China - PBOC 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 we may get the final flush down. 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 very 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 and opens up significant downside risk ahead. The market
is at new lows.
We have got
bounces without capitulation. This suggests the lows may not be in
and the regime is changing from buying the dip to selling the rip. Risky
assets are breaking to the downside across the board. Earnings revisions have
been average, but any significant upward revisions appear unlikely. The Fed
is aggressively tightening into a recession. Tail risk has
skyrocketed recently. Deflationary busts often begin after major
inflationary scares.
The transports
are leading 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 is
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 3500 area is emerging on the S and P, and 14000 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 getting a reality check and getting 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 3685 (up) and 3665 (down) on the S & P 500 and 15350 (up) and 15200 (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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