Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning April 21

 

Asset Class	Weekly Level / Change	Implications for S&P 500	Implications for Nifty*
S&P 500	5283, -1.50%	Bearish	Bearish
Nifty	23852, 4.48%	Neutral **	Bullish
China Shanghai Index	3277, 1.19%	Bullish	Bullish
Gold	3341, 2.98%	Bullish	Bullish
WTIC Crude	64.01, 4.08%	Bullish	Bullish
Copper	4.71, 4.02%	Bullish	Bullish
CRB Index	296, 2.05%	Bullish	Bullish
Baltic Dry Index	1241, -2.59%	Bearish	Bearish
Euro	1.1391, 0.27%	Neutral	Neutral
Dollar/Yen	142.17, -0.93%	Bearish	Bearish
Dow Transports	13439, 0.22%	Neutral	Neutral
Corporate Bonds (ETF)	106.75, 1.44%	Bullish	Bullish
High-Yield Bonds (ETF)	93.72, 1.44%	Bullish	Bullish
US 10-year Bond Yield	4.33%, -3.64%	Bullish	Bullish
NYSE Summation Index	-540, 9%	Bullish	Neutral
US Vix	29.65, -21.06%	Bullish	Neutral
S&P 500 Skew	130	Neutral	Neutral
CNN Fear & Greed Index	Extreme Fear	Bullish	Neutral
Nifty MMI Index	Greed	Neutral	Bearish
20 DMA, S&P 500	5517, Below	Bearish	Neutral
50 DMA, S&P 500	5706, Below	Bearish	Neutral
200 DMA, S&P 500	5752, Below	Bearish	Neutral
20 DMA, Nifty	23170, Above	Neutral	Bullish
50 DMA, Nifty	22972, Above	Neutral	Bullish
200 DMA, Nifty	24051, Below	Neutral	Bearish
S&P 500 P/E	26.28	Bearish	Neutral
Nifty P/E	21.68	Neutral	Bearish
India Vix	15.47, -23.08%	Neutral	Bullish
Dollar/Rupee	85.43, -0.88%	Neutral	Bullish
Overall	S&P 500	Nifty
Bullish Indications	11	13
Bearish Indications	7	6
Outlook	Bullish	Bullish
Observation	The S&P fell and the Nifty rose last week. Indicators are bullish for the week. Markets are crashing. Watch those stops.
On the Horizon
*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 fell, 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 extremely 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.

The past week saw US equity markets fall. Most emerging markets rose even as interest fell. Transports were unchanged. The Baltic dry index fell. The dollar was unchanged. Commodities rebounded. 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. This inversion, following the recent steepening of the yield curve, after the first 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 5295 (up) and 5270 (down) on the S&P 500 and 23950 (up) and 23750 (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.