|
Asset Class |
Weekly Level / Change |
Implications for S&P 500 |
Implications for Nifty* |
|
S&P
500 |
6870, 0.31% |
Neutral |
Neutral |
|
Nifty |
26187, -0.06% |
Neutral ** |
Neutral |
|
China
Shanghai Index |
3903, 0.37% |
Neutral |
Neutral |
|
Gold |
4243, -0.28% |
Neutral |
Neutral |
|
WTIC Crude |
60.08, 2.61% |
Bullish |
Bullish |
|
Copper |
5.46, 3.60% |
Bullish |
Bullish |
|
CRB Index |
306, 1.49% |
Bullish |
Bullish |
|
Baltic Dry
Index |
2727, 6.52% |
Bullish |
Bullish |
|
Euro |
1.1643, 0.41% |
Neutral |
Neutral |
|
Dollar/Yen |
155.35, -0.53% |
Bearish |
Bearish |
|
Dow
Transports |
17183, 3.60% |
Bullish |
Bullish |
|
Corporate
Bonds (ETF) |
110.86, -0.89% |
Bearish |
Bearish |
|
High-Yield
Bonds (ETF) |
97.29, -0.37% |
Neutral |
Neutral |
|
US 10-year
Bond Yield |
4.14%, 2.99% |
Bearish |
Bearish |
|
NYSE
Summation Index |
115, 452.00% |
Bullish |
Neutral |
|
US Vix |
15.41, -5.75% |
Bullish |
Neutral |
|
S&P
500 Skew |
149 |
Bearish |
Neutral |
|
CNN Fear
& Greed Index |
Fear |
Bullish |
Neutral |
|
Nifty MMI
Index |
Greed |
Neutral |
Bearish |
|
20 DMA, S&P
500 |
6758, Above |
Bullish |
Neutral |
|
50 DMA, S&P
500 |
6744, Above |
Bullish |
Neutral |
|
200 DMA, S&P
500 |
6195, Above |
Bullish |
Neutral |
|
20 DMA,
Nifty |
26003, Above |
Neutral |
Bullish |
|
50 DMA,
Nifty |
25619, Above |
Neutral |
Bullish |
|
200 DMA,
Nifty |
24632, Above |
Neutral |
Bullish |
|
S&P
500 P/E |
31.06 |
Bearish |
Neutral |
|
Nifty P/E |
22.80 |
Neutral |
Bearish |
|
India Vix |
10.32, -11.21% |
Neutral |
Bullish |
|
Dollar/Rupee |
89.95, 0.66% |
Neutral |
Bearish |
|
Overall |
S&P
500 |
Nifty |
|
|
Bullish
Indications |
11 |
9 |
|
|
Bearish
Indications |
5 |
6 |
|
|
Outlook |
Bullish |
Bullish |
|
|
Observation |
The S&P and the Nifty were unchanged last
week. Indicators are bullish for the week. Markets are
topping. Watch those stops. |
||
|
On
the Horizon |
Japan – GDP, UK – GDP, US – FOMC 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 were unchanged last week. Indicators are bullish for the week. Markets
are topping and about to collapse. We are transitioning into a deflationary
regime, and the risk of a recession has increased significantly. The
sentiment is fearful. Carry trade liquidation is about to resume, and the
S&P will likely find resistance soon. The macroenvironment was
already deteriorating rapidly even before the recent tariff issue. The recent
massive breakdown in transports and rally into resistance (subsequent
non-conformation for a possible third time) is quite ominous. Divergences
galore. This, combined with oil's recent free fall, has profound
recessionary implications. The Nifty is near its recent highs and will likely underperform
in the near future.
The past week saw US
equity markets unchanged. Most emerging markets rose despite rising interest
rates. Transports rose. The Baltic Dry Index rose. The dollar fell. Commodities
rose. Valuations are expensive, market breadth rebounded, and the sentiment is fearful.
Volatility (S&P 500) declined.
A currency crisis should resume at any
moment and push risky assets to new lows. Deflation is in the air, and bonds
are telegraphing just that despite intermittent spikes in yields. 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 closely tracking the 2000
moves down in the S&P 500, implying a panic low is 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 are likely to continue breaking to the downside as earnings growth
falters. The Fed is now easing, anticipating a
recession. Deflationary busts often begin after major inflationary scares. The
Dollar is rebounding from major lows, while commodities and bond yields are
flashing significant warning signs.
Global yield curves are in the process
of inverting a third time in the last 2 years,
reflecting the arrival of a significant economic slowdown. This
is a precursor to the next recession, and the riskiest assets are likely to
underperform in the future under such conditions.
The critical levels to watch for the
week are 6885 (up) and 6855 (down) on the S&P 500 and 26250 (up) and 26100
(down) on the Nifty. A significant breach
of the above levels could trigger the next major move in these 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 (has gone parabolic of
late and correcting). Gold exploded almost eight times higher over the decade
following the dot-com bust in 2000. Imagine what would happen to gold when this
AI bubble bursts. You can check out last week’s
report for a comparison. I love your
thoughts and feedback.
