Asset Class |
Weekly Level / Change |
Implications for S&P 500 |
Implications for Nifty* |
S&P
500 |
5525, 4.59% |
Bullish |
Bullish |
Nifty |
24039, 0.79% |
Neutral ** |
Bullish |
China
Shanghai Index |
3295, 0.56% |
Bullish |
Bullish |
Gold |
3298, -0.90% |
Bearish |
Bearish |
WTIC Crude |
63.02, -2.57% |
Bearish |
Bearish |
Copper |
4.90, 3.29% |
Bullish |
Bullish |
CRB Index |
299, 0.70% |
Bullish |
Bullish |
Baltic Dry
Index |
1373, 10.64% |
Bullish |
Bullish |
Euro |
1.1364, -0.24% |
Neutral |
Neutral |
Dollar/Yen |
143.67, 1.06% |
Bullish |
Bullish |
Dow Transports |
13497, 0.43% |
Neutral |
Neutral |
Corporate
Bonds (ETF) |
107.99, 1.16% |
Bullish |
Bullish |
High-Yield
Bonds (ETF) |
95.02, 1.39% |
Bullish |
Bullish |
US 10-year
Bond Yield |
4.25%, -1.79% |
Bullish |
Bullish |
NYSE
Summation Index |
-280, 48% |
Bullish |
Neutral |
US Vix |
24.84, -21.06% |
Bullish |
Neutral |
S&P
500 Skew |
132 |
Neutral |
Neutral |
CNN Fear
& Greed Index |
Fear |
Bullish |
Neutral |
Nifty MMI
Index |
Greed |
Neutral |
Bearish |
20 DMA, S&P
500 |
5365, Above |
Bullish |
Neutral |
50 DMA, S&P
500 |
5636, Below |
Bearish |
Neutral |
200 DMA, S&P
500 |
5747, Below |
Bearish |
Neutral |
20 DMA,
Nifty |
23419, Above |
Neutral |
Bullish |
50 DMA,
Nifty |
23032, Above |
Neutral |
Bullish |
200 DMA,
Nifty |
24055, Below |
Neutral |
Bearish |
S&P
500 P/E |
27.54 |
Bearish |
Neutral |
Nifty P/E |
21.72 |
Neutral |
Bearish |
India Vix |
17.16, 10.93% |
Neutral |
Bearish |
Dollar/Rupee |
85.38, -0.06% |
Neutral |
Neutral |
Overall |
S&P
500 |
Nifty |
|
Bullish
Indications |
13 |
12 |
|
Bearish
Indications |
5 |
6 |
|
Outlook |
Bullish |
Bullish |
|
Observation |
The S&P and the Nifty rose last week.
Indicators are bullish for the week. Markets are
topping. Watch those stops. |
||
On
the Horizon |
US – Employment
data, Eurozone – CPI,
German GDP, Japan – BOJ rate decision |
||
*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 rose last week. Indicators are bullish for the week. Markets
have topped, and the bottom of this leg will likely be revisited near 4800 soon.
We are transitioning into a deflationary regime. The sentiment
is fearful. Carry trade liquidation has resumed as the S&P is below the
200 DMA near 5750. The macro-environment was rapidly deteriorating
even before these latest rounds of tariffs. The recent massive breakdown
in transports is quite ominous, with profound recessionary implications. The
Nifty has corrected significantly from recent highs and will likely end its
outperformance soon. The 200 DMAs of most global indices have started
declining after almost 4 years, and volatility indices are about to exhibit
golden crosses in their weekly MAs.
The past week saw US equity markets rise.
Most emerging markets rose as interest fell. Transports were unchanged. The
Baltic dry index rose. The dollar was unchanged. Commodities rose. Valuations are
expensive, market breadth rebounded, and the sentiment is fearful. Volatility
(S&P 500) retraced lower.
A currency crisis should resume and push
risky assets to new lows. 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 falters. 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 inverted a
second time after the recent steepening,
reflecting the arrival of a significant economic slowdown. Following
the recent steepening of the yield curve after the first inversion, this second
inversion 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 5540 (up) and 5510 (down) on the S&P 500 and 24100 (up) and 23950
(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 is a sell on every rise. Gold
increasingly looks like the asset class to own over the next decade (currently going
parabolic). Gold exploded almost eight times higher over the decade following
the dot-com bust in 2000. Imagine what would happen to gold as this AI bubble
bursts. You can check out last week’s
report for a comparison. I love your
thoughts and feedback.