Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning January 4

Indicator	Weekly Level / Change / Significance	Implication for S & P 500	Implication for Nifty*
S & P 500	2044, -0.83%	Bearish	Bearish
Nifty	7963, 1.30%	Neutral**	Bullish
China Shanghai Index	3539, -2.03%	Bearish	Bearish
Gold	1061, -1.42%	Bearish	Bearish
WTIC Crude	37.07, -2.75%	Bearish	Bearish
Copper	2.13, 0.64%	Bullish	Bullish
Baltic Dry Index	478, 0.00%	Neutral	Neutral
Euro	1.093, -0.26%	Neutral	Neutral
Dollar/Yen	120.20, -0.17%	Neutral	Neutral
Dow Transports	7509, -1.49%	Bearish	Bearish
High Yield (ETF)	33.91, 0.12%	Neutral	Neutral
US 10 year Bond Yield	2.27%, 1.16%	Bearish	Bearish
Nyse Summation Index	-20, 85.17%	Bullish	Neutral
US Vix	18.21, 15.69%	Bearish	Bearish
20 DMA, S and P 500	2050, Below	Bearish	Neutral
50 DMA, S and P 500	2067, Below	Bearish	Neutral
200 DMA, S and P 500	2061, Below	Bearish	Neutral
20 DMA, Nifty	7793, Above	Neutral	Bullish
50 DMA, Nifty	7903, Above	Neutral	Bullish
200 DMA, Nifty	8191, Below	Neutral	Bearish
India Vix	14.26, 3.75%	Neutral	Bearish
Dollar/Rupee	66.23, 0.42%	Neutral	Neutral
Overall	S & P 500	Nifty
Bullish Indications	2	4
Bearish Indications	10	9
Outlook	Bearish	Bearish
Observation	The Sand P 500 was down and the Nifty was up last week. Indicators are bearish. Looking for downside to resume.
On the Horizon	Canada - Employment data, Euro zone – German employment data, CPI, Euro zone  CPI, U.S – ISM data, FED minutes, employment data, China – CPI.
*Nifty	India’s Benchmark Stock Market Index
Raw Data	Courtesy Google finance, Stock charts, FXCM
**Neutral	Changes less than 0.5% are considered neutral

The US market was down while the Nifty rallied last week. Signals are bearish for the upcoming week. The markets are failing at resistance and are likely to begin major breakdowns in 2016.  The critical levels to watch are 2060 (up) and 2030 (down) on the S & P and 8000 (up) and 7900 (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. You can also check out snapshots of the 

S and P 500 and Nifty Indices. Love your thoughts and feedback.

Predictions for 2016

Here are my predictions for 2016:

1) 2016 is finally the year when the Euro breaches parity to the Dollar:

2) 2016 will prove to be a year of significant under performance of risk assets, particularly global stock markets and emerging market currencies:

3) 2016 will prove to be the year where carry trades get liquidated as significant Yen strength resumes:

4) Volatility surges in 2016 as global risk aversion increases significantly:

Update on Those Predictions for 2015

At the beginning of 2015 I made some predictions for grins. Here's how they played out:
The original post containing the predictions can be found here: 

1) Dollar strength continues after a brief pause against all major currencies except the yen. With the Euro decisively breaking the long term support of 1.20.
This indeed was the year of dollar strength with the Euro below 1.10 and the trend may continue well into 2016.

2) Yen strength should result in a bout of carry trade liquidation that is a major negative for risk assets such as emerging market currencies and commodities.
While the dollar was broadly strong against the yen, the Yen was relatively strong against most other majors and 2016 promised to be year of Yen strength. This year saw a massive down move in commodities as expected.

3) Despite slowing growth in most emerging economies, policy makers have their hands tied and spend a whole lot of resources defending their weak currencies unsuccessfully with higher interest rates.
Emerging market currencies saw major take downs ( The Real & Rand being notable examples) across the board and the trend is set to continue in 2016.

4) This in turn sparks a major exodus of FII money flows out of emerging economies like the BRIC countries which causes their stock markets to significantly under perform despite their terrific performance in 2014 and greedy analysts calls for more.
BRIC stock markets under performed significantly in 2015 except China and more weakness is likely in 2016.

5) Volatility surges in 2015 as the Vix index doubles following a major take down of stock market indices across the globe.
The Vix crossed 50 briefly in August before retreating. A big up move in the Vix is likely in 2016.

6) Risk free assets will be among the safer bets in 2015 as risk appetites significantly wanes with treasury yields continuing to plummet with QE forever still continuing but without the desired outcomes.
Risk free assets outperformed risky assets globally but US long term yields rose as the FED began tightening Monetary policy. Risky free assets will continue to outperform in 2016.

Happy New Year!