Nifty - The Endgame Nears

Nifty is sitting on multi-year resistance. Major rejection is likely in line with a deflationary crash likely to play out in the next few years. Major support at 9500:

Nifty the End is Near by RajveerRawlin7a on TradingView.com

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning August 17

Indicator	Weekly Level / Change	Implication for S & P 500	Implication for Nifty*
S & P 500	3373, 0.64%	Bullish	Bullish
Nifty	11178, -0.32%	Neutral **	Neutral
China Shanghai Index	3360, 0.18%	Neutral	Neutral
Gold	1954, -3.67%	Bearish	Bearish
WTIC Crude	42.23, 2.45%	Bullish	Bullish
Copper	2.86, 2.52%	Bullish	Bullish
Baltic Dry Index	1577, 5.06%	Bullish	Bullish
Euro	1.1843, 0.47%	Neutral	Neutral
Dollar/Yen	106.60, 0.63%	Bullish	Bullish
Dow Transports	10960, 3.62%	Bullish	Bullish
High Yield (Bond ETF)	104.38, -1.42%	Bearish	Bearish
US 10 year Bond Yield	0.71%, 25.33%	Bearish	Bearish
Nyse Summation Index	921, 15.51%	Bullish	Bullish
US Vix	22.05, -0.72%	Bullish	Bullish
Skew	137	Neutral	Neutral
20 DMA, S and P 500	3296, Above	Bullish	Neutral
50 DMA, S and P 500	3199, Above	Bullish	Neutral
200 DMA, S and P 500	3065, Above	Bullish	Neutral
20 DMA, Nifty	11171, Above	Neutral	Bullish
50 DMA, Nifty	10701, Above	Neutral	Bullish
200 DMA, Nifty	10842, Above	Neutral	Bullish
S & P 500 P/E	28.99	Bearish	Neutral
Nifty P/E	31.09	Neutral	Bearish
India Vix	21.67, -4.01%	Neutral	Bullish
Dollar/Rupee	74.90, -0.16%	Neutral	Neutral
Overall	S & P 500	Nifty
Bullish Indications	11	12
Bearish Indications	4	4
Outlook	Bullish	Bullish
Observation	The S and P was up and the Nifty fell last week. Indicators are bullish for the week. The markets have begun a great depression style collapse. Watch those stops.
On the Horizon	Euro Zone – CPI, UK CPI, Japan – 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 500 rallied and the Nifty fell last week. Indicators are bullish for the coming week. The recent rally to the prior highs is on borrowed time as we experience one of the worst earnings decline period in stock market history with extremely high valuations amid a lot of bearish divergences. We rallied 46% right after the great depressions (1930’s) first collapse and we have rallied over 50% in our most recent rally of the lows in a similar 6 month period. After extreme euphoria for the indices a highly probable selloff to the 2700 area is emerging on the S and P, and 9000 should arrive on the Nifty in short order. The FED is repeating the Japan experiment and the lost 3 decades in Japan (1989-2019) is set to repeat across the globe. SPX 1500 and lower by year end and we stay there till 2050, scary? The markets are very close to an epic melt down and the SPX is headed way lower. The markets are overvalued, overbought and out of touch with economic realities. Long term, the epic meltdown is set to continue resulting in a 5 year plus bear market with lot lower levels maybe as low as 800 on the S and P. QE forever from the FED is about to trigger the deflationary collapse of the century and we have made a major top in global equity markets. The market is looking like the short of a life time with non-conformations from the transports, other global indices and commodities. High valuations continue. The breakdown in Crude and the Euro is a precursor to yet another massive drop in the S and P 500. The recent global virus epidemic (black swan) is likely to dent global GDP significantly and usher in a depression much faster than most think. The trend has changed from bullish to bearish and the markets are getting smashed by a strong dollar. Looking for significant under performance in the Nifty going forward on rapidly deteriorating macros. A 5 year deflationary wave has started in key asset classes like the Euro, stocks and commodities amidst a number of bearish divergences and over stretched valuations. We are entering a multi-year great depression. The markets are still trading well over 3 standard deviations above their long term averages from which corrections usually result. Tail risk has been very high off late as the yield curve inverts into a recession. The critical levels to watch for the week are 3385 (up) and 3360 (down) on the S & P 500 and 11250 (up) and 11100 (down) on the Nifty. A significant breach of the above levels could trigger the next big move in the above markets. You can check out last week’s report for a comparison. Love your thoughts and feedback.

 

 

Massive M top in Nifty completing and targeting 6000

Check out this chart on the Nifty from StockCharts.com. A massive M top has completed on the Nifty that targets 6000 long term. This incidentally coincides with a trailing P/E of over 24 which is suggestive of over valuation. Note the recent exhaustion candle much like in March 2015 from which the market fell 25%.

Interesting Market News and Views from Global Financial Markets-14

1) India’s markets lose their Modi mojo - FT.com

From www.ft.com - Today, 8:34 PM

Narendra Modi swept to election victory on a pro-business economic platform on May 16 2014, pushing India’s benchmark Sensex share index to a record high of more than 24,000 points.

2) Fed Sees Weaker Growth and Slow Inflation Rise; U.S. Indices at an On-and-Off Mode

From www.fxstreet.com - Today, 8:31 PM

The two-day Fed monetary policy meeting that ended on Wednesday was unlikely to stoke much volatility to the greenback, as it wasn’t followed by a press conference as usual.

3) How to Invest in Stocks During 2016's Extreme Volatility

From moneymorning.com - Today, 8:31 AM

With global markets experiencing wild swings in 2016, investors want to know how to invest in stocks. Here's our complete guide on how to invest now.

4) Stock Market On Verge Of Crash

From www.talkmarkets.com - Today, 8:26 AM

The developing cyclical downtrend in the stock market is on the verge of accelerating into a crash.

5) How The Fed is Suffocating The Economy | Clif Droke | Safehaven.com

From safehaven.com - Today, 8:18 AM

There are two established ways of killing forward momentum and induce economic recession. One is to sharply reverse monetary policy or margin maintenance policy from very loose to very tight.

6) Wednesday links: when markets fall

From abnormalreturns.com - Today, 8:18 AM

Book notes: Meb Faber’s Investing With the House: Hacking the Top Hedge Funds is a good introduction to hedge fund cloning.