|
Asset Class |
Weekly Level / Change |
Implication for S & P 500 |
Implication for Nifty* |
|
S & P
500 |
6026, -0.24% |
Neutral |
Neutral |
|
Nifty |
23560, 0.33% |
Neutral ** |
Neutral |
|
China
Shanghai Index |
3304, 1.63% |
Bullish |
Bullish |
|
Gold |
2888, 1.86% |
Bullish |
Bullish |
|
WTIC Crude |
71.00, -2.11% |
Bearish |
Bearish |
|
Copper |
4.59, 7.24% |
Bullish |
Bullish |
|
CRB Index |
308, 0.82% |
Bullish |
Bullish |
|
Baltic Dry
Index |
815, 10.88% |
Bullish |
Bullish |
|
Euro |
1.0327, -0.34% |
Neutral |
Neutral |
|
Dollar/Yen |
151.40, -2.44% |
Bearish |
Bearish |
|
Dow Transports |
16147, -0.98% |
Bearish |
Neutral |
|
Corporate
Bonds (ETF) |
107.53, 0.07% |
Neutral |
Neutral |
|
High Yield
Bonds (ETF) |
96.24, -0.54% |
Bearish |
Bearish |
|
US 10-year
Bond Yield |
4.49%, -1.05% |
Bullish |
Bullish |
|
NYSE
Summation Index |
207, 48% |
Bullish |
Neutral |
|
US Vix |
16.54, 0.67% |
Bearish |
Neutral |
|
S & P
500 Skew |
167 |
Bearish |
Neutral |
|
CNN Fear
& Greed Index |
Fear |
Bullish |
Neutral |
|
Nifty MMI
Index |
Fear |
Neutral |
Bullish |
|
20 DMA, S
& P 500 |
6009, Above |
Bullish |
Neutral |
|
50 DMA, S
& P 500 |
6001, Above |
Bullish |
Neutral |
|
200 DMA, S
& P 500 |
5656,
Above |
Bullish |
Neutral |
|
20 DMA,
Nifty |
23274, Above |
Neutral |
Bullish |
|
50 DMA,
Nifty |
23767, Below |
Neutral |
Bearish |
|
200 DMA,
Nifty |
24023, Below |
Neutral |
Bearish |
|
S & P
500 P/E |
30.13 |
Bearish |
Neutral |
|
Nifty P/E |
21.41 |
Neutral |
Bearish |
|
India Vix |
13.69, -2.91% |
Neutral |
Bullish |
|
Dollar/Rupee |
87.63, 1.26% |
Neutral |
Bearish |
|
Overall |
S
& P 500 |
Nifty |
|
|
Bullish
Indications |
11 |
9 |
|
|
Bearish
Indications |
6 |
7 |
|
|
Outlook |
Bullish |
Bullish |
|
|
Observation |
The
S&P and the Nifty were unchanged last week. Indicators are bullish for
the week. Markets
are topping. Watch those stops. |
||
|
On
the Horizon |
US – CPI, PPI, Eurozone – German CPI, UK – GDP |
||
|
*Nifty |
India’s
Benchmark Stock Market Index |
||
|
Raw Data |
Data courtesy
stockcharts.com, investing.com, multpl.com, nseindia.com, tickertape.in |
||
|
**Neutral |
Changes
less than 0.5% are considered neutral |
The S&P and the Nifty
were unchanged last week. Indicators are bullish for the
week. Markets are topping. We are transitioning from an
inflationary regime to a deflationary one. The sentiment is fearful,
and risk-reward is poor at these levels as divergences develop. Carry trade
liquidation may resume in short order, and the S & P is due for a
trip to the 200 DMA near 5600. Markets have bounced from oversold levels,
and rallies may terminate soon on the S & P. The Nifty has corrected significantly
from recent highs and will likely underperform.
The past week saw US equity markets unchanged.
Most emerging markets rose as interest rates fell. Transports fell. The Baltic
dry index rose. The dollar was unchanged. Commodities rose. Valuations are expensive,
market breadth has risen, and the sentiment is fearful. Fear (S&P 500) rose.
After this rally, a currency crisis
should resume and push risky assets to new lows. Despite the recent
inflationary spike, deflation is in the air, and bonds are telegraphing just
that. It feels like a 2008-style recession trade has begun, with a potential
for a decline in risk assets across the board. The current market is tracking
closely the 2000 moves down in the S&P 500, implying a
panic low right ahead in the upcoming months (My views do not matter; kindly
pay attention to the levels). A dollar rally is a likely catalyst.
The S&P 500 is correcting from recent
highs. We have bounced from recent lows without capitulation. This
suggests the lows may not be in, and the regime has changed from buying
the dip to selling the rip. We may get a final flush down soon.
Risky assets should continue breaking to the downside as earnings growth peaks. The Fed has aggressively tightened into a recession. Deflationary
busts often begin after major inflationary scares. The Dollar, commodities, and
bond yields are flashing significant warning signs.
Global yield curves have steepened after
inverting significantly, reflecting a significant
economic slowdown. The recent steepening of the yield
curve, within an inverted context, with rates falling, is a precursor to the
next recession, and the riskiest assets will underperform going forward under
such conditions.
The critical levels to watch for the
week are 6040 (up) and 6015 (down) on the S&P 500 and 23650 (up) and 23450
(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 again and likely be a sell on every
rise. Gold increasingly looks like the asset class to own over the next
decade. Gold exploded almost eight times higher over the decade following the
dot-com bust in 2000. Imagine what would happen as this AI bubble bursts. You
can check out last week’s
report for a comparison. I love your
thoughts and feedback.
