|
Asset Class |
Weekly Level / Change |
Implication for S & P 500 |
Implication for Nifty* |
|
S & P
500 |
5117, -0.13% |
Neutral |
Neutral |
|
Nifty |
22023, -2.09% |
Neutral ** |
Bearish |
|
China
Shanghai Index |
3055, 0.28% |
Neutral |
Neutral |
|
Gold |
2159, -1.19% |
Bearish |
Bearish |
|
WTIC Crude |
80.58, 3.29% |
Bullish |
Bullish |
|
Copper |
4.12, 5.90% |
Bullish |
Bullish |
|
CRB Index |
285, 2.90% |
Bullish |
Bullish |
|
Baltic Dry
Index |
2374, 1.24% |
Bullish |
Bullish |
|
Euro |
1.0888, -0.45% |
Neutral |
Neutral |
|
Dollar/Yen |
149.07, 1.36% |
Bullish |
Bullish |
|
Dow Transports |
15499, -1.40% |
Bearish |
Bearish |
|
Corporate
Bonds (ETF) |
107.83, -1.09% |
Bearish |
Bearish |
|
High Yield
Bonds (ETF) |
94.35, -0.37% |
Neutral |
Neutral |
|
US 10-year
Bond Yield |
4.31%, 5.47% |
Bearish |
Bearish |
|
NYSE
Summation Index |
787, 4% |
Bullish |
Neutral |
|
US Vix |
14.41, -2.24% |
Bullish |
Bullish |
|
Skew |
139 |
Neutral |
Neutral |
|
CNN Fear
& Greed Index |
Greed |
Bearish |
Bearish |
|
20 DMA, S
& P 500 |
5096, Above |
Bullish |
Neutral |
|
50 DMA, S
& P 500 |
4963, Above |
Bullish |
Neutral |
|
200 DMA, S
& P 500 |
4576, Above |
Bullish |
Neutral |
|
20 DMA,
Nifty |
22200, Below |
Neutral |
Bearish |
|
50 DMA,
Nifty |
21894, Above |
Neutral |
Bullish |
|
200 DMA,
Nifty |
20227,
Above |
Neutral |
Bullish |
|
S & P
500 P/E |
27.77 |
Bearish |
Neutral |
|
Nifty P/E |
22.74 |
Neutral |
Bearish |
|
India Vix |
13.69, 0.57% |
Neutral |
Bearish |
|
Dollar/Rupee |
82.89, 0.18% |
Neutral |
Neutral |
|
Overall |
S
& P 500 |
Nifty |
|
|
Bullish
Indications |
8 |
8 |
|
|
Bearish
Indications |
6 |
9 |
|
|
Outlook |
Bullish |
Bearish |
|
|
Observation |
The
S&P was unchanged while the Nifty fell last week. Indicators are mixed
for the week. Markets are
topping. Watch those stops. |
||
|
On
the Horizon |
Eurozone – CPI, UK – CPI, BOE rate decision, US – FOMC
rate decision, Japan – BOJ rate decision |
||
|
*Nifty |
India’s
Benchmark Stock Market Index |
||
|
Raw Data |
Data courtesy
stockcharts.com, investing.com, multpl.com, nseindia.com |
||
|
**Neutral |
Changes
less than 0.5% are considered neutral |
The S&P 500 was unchanged and the Nifty fell last
week. Indicators are mixed for the week. Markets are topping.
We are transitioning from an inflationary regime to a deflationary
collapse. The Nifty has started to correct and will likely underperform. We
are way overbought short-term and are overdue a pullback here
to as low as the 50 DMA, as we embrace bearish seasonality.
The past week saw US equity markets little changed. Most emerging
markets were unchanged, as interest rates rose. Transports fell. The Baltic dry
index rose. The dollar rose. Commodities rose sharply. Valuations continue to
be quite expensive, market breadth improved, and the sentiment is now
exuberant. Fear fell this week, as a possible reality check from an immediate
FED Pivot loom.
After this rally, a currency crisis should resume and push risky
assets to new lows across the board. Deflation is in the air despite the recent
inflationary spike and bonds are telegraphing just that. 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 rebound from major support is a likely catalyst.
The S&P 500 is near all-time 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 across the board, as earnings growth peaks.
The Fed has aggressively tightened into a recession. Deflationary
busts often begin after major inflationary scares. The market has rebounded
after correcting significantly, and more is left on the downside. The Dollar,
commodities, and bond yields are continuing to flash major warning signs.
The epic correction signal occurred with retail, hedge funds, and
speculators all in, in January 2022, suggesting a major top is in. The moment
of reckoning is here. With extremely high valuations, a crash is on the menu.
Low volatility suggests complacency and downside ahead.
Global yield curves have inverted significantly reflecting a major upcoming recession. 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 5130 (up) and 5105
(down) on the S&P 500 and 22100 (up) and 21950 (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 yet again
and will likely prove to be a sell on every rise. Gold is increasingly
looking like the asset class to own over the next decade. (Gold exploded almost
8 times higher over the decade following the dot-com bust in 2000, just imagine
what would happen when this AI bubble bursts? following the recent crypto
bubble burst) You can check out last week’s
report for a comparison. Love your
thoughts and feedback.
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