Indicator |
Weekly Level / Change |
Implication for S & P 500 |
Implication for Nifty* |
S & P 500 |
4229, - 1.21% |
Bearish |
Bearish |
Nifty |
17758, 0.34% |
Neutral ** |
Neutral |
China Shanghai Index |
3258, - 0.57% |
Bearish |
Bearish |
Gold |
1760, - 3.04% |
Bearish |
Bearish |
WTIC Crude |
89.97, - 2.30% |
Bearish |
Bearish |
Copper |
3.67, 0.27% |
Neutral |
Neutral |
Baltic Dry Index |
1279, - 13.41% |
Bearish |
Bearish |
Euro |
1.0037, - 2.15% |
Bearish |
Bullish |
Dollar/Yen |
136.93, 2.58% |
Bullish |
Bullish |
Dow Transports |
14772, - 2.48% |
Bearish |
Bearish |
Corporate Bonds (ETF) |
111.60, - 2.31% |
Bearish |
Bearish |
High Yield Bonds (ETF) |
95.08, - 2.55% |
Bearish |
Bearish |
US 10-year Bond Yield |
2.98%, 4.71% |
Bearish |
Bearish |
NYSE Summation Index |
830, 14% |
Bullish |
Neutral |
US Vix |
20.60, 5.48% |
Bearish |
Bearish |
Skew |
124 |
Neutral |
Neutral |
CNN Fear & Greed |
Neutral |
Neutral |
Neutral |
20 DMA, S & P 500 |
4156, Above |
Bullish |
Neutral |
50 DMA, S & P 500 |
3967, Above |
Bullish |
Neutral |
200 DMA, S & P 500 |
4321, Below |
Bearish |
Neutral |
20 DMA, Nifty |
17296, Above |
Neutral |
Bullish |
50 DMA, Nifty |
16450, Above |
Neutral |
Bullish |
200 DMA, Nifty |
16987, Above |
Neutral |
Bullish |
S & P 500 P/E |
21.37 |
Bearish |
Neutral |
Nifty P/E |
21.20 |
Neutral |
Bearish |
India Vix |
18.29, 3.85% |
Neutral |
Bearish |
Dollar/Rupee |
79.92, 0.35% |
Neutral |
Neutral |
Overall |
S & P 500 |
Nifty |
|
Bullish Indications |
3 |
5 |
|
Bearish Indications |
13 |
12 |
|
Outlook |
Bearish |
Bearish |
|
Observation |
The S
and P fell and the Nifty was unchanged last week. Indicators are bearish for
the week. The markets are pushing
resistance. Watch those stops. |
||
On the Horizon |
US –
GDP, Jackson Hole Symposium, Eurozone
– German GDP, 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
fell and the Nifty was unchanged last week. Indicators are bearish for
the week. We have likely hit resistance near the 200 DMA on the S
& P. The upcoming currency crisis should push risky
assets to new lows across the board. Deflation is
in the air despite the recent inflationary spike and the Chinese Yuan,
Euro, government bonds, and commodities are 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 below the 200 DMA, after spending a very long time above it, and
its 200 DMA is declining. Monthly MACDs on most global
markets are still negative. This spells trouble and opens
up significant downside risk ahead.
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. We
may get a final flush down soon. Risky assets are
breaking to the downside across the board. Downward earnings revisions are
likely soon.
The Fed is aggressively
tightening into a recession. Tail risk while moderating is
still high. Deflationary busts often begin after major inflationary
scares. The market has corrected significantly and more is left on the
downside.
The Dollar, commodities,
and bond yields are continuing to flash major warning
signs despite the recent counter-trend moves. 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 rising rates and 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 4240 (up) and 4215 (down) on
the S & P 500 and 17850 (up) and 17650 (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 will get 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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