The Reversal of the Bernanke Put

Not long ago the Bernanke (DEF) put was in full force. It meant that if the economic news was bad the FED would cut interest rates and bail the market Out. If the economic news was good then stocks would go up on the good news. Fast forward to today and we have the first FED hike and the FED put is slowly but surely getting reversed with the FED funds rate still close to record lows. This is bad news for risk assets globally as the FED is now surely powerless to support asset prices with their monetary policy.

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning January 11

Indicator	Weekly Level / Change / Significance	Implication for S & P 500	Implication for Nifty*
S & P 500	1922, -5.96%	Bearish	Bearish
Nifty	7601, -4.54%	Neutral**	Bearish
China Shanghai Index	3186, -9.97%	Bearish	Bearish
Gold	1104, 4.11%	Bullish	Bullish
WTIC Crude	32.88, -11.30%	Bearish	Bearish
Copper	2.02, -5.62%	Bearish	Bearish
Baltic Dry Index	429, -10.25%	Bearish	Bearish
Euro	1.093, 0.67%	Bullish	Bullish
Dollar/Yen	117.51, -2.30%	Bearish	Bearish
Dow Transports	6946, -7.49%	Bearish	Bearish
High Yield (ETF)	33.48, -1.27%	Bearish	Bearish
US 10 year Bond Yield	2.13%, -6.13%	Bullish	Bullish
Nyse Summation Index	-158, -775.82%	Bearish	Neutral
US Vix	27.01, 48.33%	Bearish	Bearish
20 DMA, S and P 500	2028, Below	Bearish	Neutral
50 DMA, S and P 500	2059, Below	Bearish	Neutral
200 DMA, S and P 500	2058, Below	Bearish	Neutral
20 DMA, Nifty	7791, Below	Neutral	Bearish
50 DMA, Nifty	7846, Below	Neutral	Bearish
200 DMA, Nifty	8167, Below	Neutral	Bearish
India Vix	17.80, 24.81%	Neutral	Bearish
Dollar/Rupee	66.89, 1.00%	Bearish	Bearish
Overall	S & P 500	Nifty
Bullish Indications	3	3
Bearish Indications	14	15
Outlook	Bearish	Bearish
Observation	The Sand P 500 and the Nifty were down hard last week. Indicators are bearish. Looking for downside to continue.
On the Horizon	Australia - Employment data, Euro zone – German GDP, U.K – Rate decision, U.S – Retail sales, consumer confidence, China – Loan & financing data.
*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 and Nifty fell hard last week. Signals are bearish for the upcoming week. The markets are in crash mode and are likely to continue to breakdown in 2016.  The critical levels to watch are 1940 (up) and 1900 (down) on the S & P and 7600 (up) and 7500 (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.

Interesting Market News and Views from Global Financial Markets-13

1) What’s really important about China’s stock market disaster, and what’s not

From www.washingtonpost.com - Today, 9:45 AM

What you need to know about the latest decline in China.

2) Gold near 7-week high as stocks retreat | Intra...

From www.scoop.it - Today, 9:44 AM

Gold traded near a seven-week high on Thursday as investors channelled money into the safe-haven metal amid a global stock market rout, worries over the Chinese economy and heightened geopolitical tensions.

3) Fears for world economy wreak carnage on stocks and oil

From www.dailymail.co.uk - Today, 9:39 AM

World stock markets tumbled and oil plumbed new lows Thursday as investors feared for the global economy on signs of a dramatic slowdown in powerhouse China....

4) Loonie sinks to lowest level in 12 years as Canadian oil price drops to record low

From www.cbc.ca - Today, 9:39 AM

The Canadian dollar hit its lowest level in more than 12 years as the main Canadian oil blend dropped to a record low price and stock markets tumbled.

5) Chinese stock market plunges again: For how much longer can China hold back the tide?

From www.telegraph.co.uk - Today, 9:39 AM

China used new rules to suspend stock market trading overnight after another
set of disappointing factory production figures. But for how much longer can
it keep up the pretence?

6) George Soros warns China market meltdown ominously echoes 2008

From www.dailymail.co.uk - Today, 9:43 AM

For the second time this week, trading was halted in Shanghai sending investors into a tailspin after the CSI 300 slipped a staggering 7 per cent just 30 minutes into the day on Thursday.