Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning August 31

Indicator	Weekly Level / Change	Implication for S & P 500	Implication for Nifty*
S & P 500	3508, 3.26%	Bullish	Bullish
Nifty	11648, 2.43%	Neutral **	Bullish
China Shanghai Index	3404, 0.68%	Bullish	Bullish
Gold	1973, 1.34%	Bullish	Bullish
WTIC Crude	42.96, 1.46%	Bullish	Bullish
Copper	3.01, 3.11%	Bullish	Bullish
Baltic Dry Index	1504, 1.55%	Bullish	Bullish
Euro	1.1901, 0.90%	Bullish	Bullish
Dollar/Yen	105.36, -0.40%	Neutral	Neutral
Dow Transports	11322, 3.49%	Bullish	Bullish
High Yield (Bond ETF)	105.79, 0.63%	Bullish	Bullish
US 10 year Bond Yield	0.72%, 14.65%	Bearish	Bearish
Nyse Summation Index	675, -15.97%	Bearish	Neutral
US Vix	22.96, 1.86%	Bearish	Bearish
Skew	146	Bearish	Bearish
20 DMA, S and P 500	3386, Above	Bullish	Neutral
50 DMA, S and P 500	3259, Above	Bullish	Neutral
200 DMA, S and P 500	3083, Above	Bullish	Neutral
20 DMA, Nifty	11315, Above	Neutral	Bullish
50 DMA, Nifty	10987, Above	Neutral	Bullish
200 DMA, Nifty	10821, Above	Neutral	Bullish
S & P 500 P/E	30.16	Bearish	Neutral
Nifty P/E	32.92	Neutral	Bearish
India Vix	18.35, -7.97%	Neutral	Bullish
Dollar/Rupee	73.12, -2.41%	Neutral	Bullish
Overall	S & P 500	Nifty
Bullish Indications	11	15
Bearish Indications	5	4
Outlook	Bullish	Bullish
Observation	The S and P and the Nifty were up 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 – German employment data, CPI, US – Employment data
*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 and the Nifty rallied 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 and a September / October crash is on the menu. 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 3520 (up) and 3495 (down) on the S & P 500 and 11750 (up) and 11550 (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.

Nasdaq - Nasdaq 100 Ratio at 2000 Levels - Massive Crash Just around the Corner?

After 19 long years the Nasdaq - Nasdaq 100 Ratio has reached the record lows it saw in 2000, when a hand full of tech stocks outperformed the broader market.  This occurred at the market peak just before the dotcom bubble burst taking the Nasdaq down almost 80% and the rest of the market over 40%. This time will be no different with a massive market crash just around the corner, with all signs such as global inverted yield curves and trade wars pointing to a severe recession ahead:

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning March 12

Indicator	Weekly Level / Change	Implication for S & P 500	Implication for Nifty*
S & P 500	2787, 3.54%	Bullish	Bullish
Nifty	10227, -2.21%	Neutral **	Bearish
China Shanghai Index	3307, 1.62%	Bullish	Bullish
Gold	1324, 0.05%	Neutral	Neutral
WTIC Crude	62.04, 1.29%	Bullish	Bullish
Copper	3.14, 0.37%	Neutral	Neutral
Baltic Dry Index	1201, 0.42%	Neutral	Neutral
Euro	1.2307, -0.09%	Neutral	Neutral
Dollar/Yen	106.77, 0.98%	Bullish	Bullish
Dow Transports	10740, 3.94%	Bullish	Bullish
High Yield (ETF)	36.09, 0.25%	Neutral	Neutral
US 10 year Bond Yield	2.89%, 1.30%	Bearish	Bearish
Nyse Summation Index	164, 1023.97%	Bullish	Neutral
US Vix	14.64, -25.27%	Bullish	Bearish
Skew	128	Neutral	Neutral
20 DMA, S and P 500	2714, Above	Bullish	Neutral
50 DMA, S and P 500	2742, Above	Bullish	Neutral
200 DMA, S and P 500	2571, Above	Bullish	Neutral
20 DMA, Nifty	10420, Below	Neutral	Bearish
50 DMA, Nifty	10606, Below	Neutral	Bearish
200 DMA, Nifty	10140, Above	Neutral	Bullish
India Vix	14.52, 3.22%	Neutral	Bearish
Dollar/Rupee	64.93, -0.39%	Neutral	Neutral
Overall	S & P 500	Nifty
Bullish Indications	10	6
Bearish Indications	1	6
Outlook	Bullish	Neutral
Observation	The S and P 500 rallied and the Nifty fell last week. Indicators are mixed. The markets have made important tops. Time to watch those stops.
On the Horizon	New Zealand – GDP, China – Industrial production, Euro Zone – German ZEW economic sentiment, CPI, Switzerland – SNB rate decision, U.S – CPI, Retail sales, Oil inventories, Canada – Poloz speech
*Nifty	India’s Benchmark Stock Market Index
Raw Data	Courtesy Google finance, Stock charts, investing.com
**Neutral	Changes less than 0.5% are considered neutral

Image from marketwatch.com

The S and P 500 rallied and the Nifty sharply under performed last week. Indicators are mixed for the upcoming week. Quantitative tightening by the FED is yet to be priced in fully. The markets are still trading well over 3 standard deviations above their long term averages from which corrections usually result. Divergences in high yield and surging bond yields are flashing warning signs. An interest rate shock can’t be ruled out. Indian market volatility is still below US market volatility so there is complacency and some catch up left on the down side. The critical levels to watch are 2800 (up) and 2775 (down) on the S & P and 10300 (up) and 10150 (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.