Asset Class |
Weekly Level / Change |
Implication for S & P 500 |
Implication for Nifty* |
S & P
500 |
5581, -1.53% |
Bearish |
Bearish |
Nifty |
23519, 0.72% |
Neutral ** |
Bullish |
China
Shanghai Index |
3351, -0.40% |
Neutral |
Neutral |
Gold |
3127, 1.58% |
Bullish |
Bullish |
WTIC Crude |
69.36, 1.58% |
Bullish |
Bullish |
Copper |
5.15, 0.76% |
Bullish |
Bullish |
CRB Index |
307, 0.36% |
Neutral |
Neutral |
Baltic Dry
Index |
1602, -2.50% |
Bearish |
Bearish |
Euro |
1.0827, 0.12% |
Neutral |
Neutral |
Dollar/Yen |
149.81, 0.33% |
Neutral |
Neutral |
Dow Transports |
14593, -0.11% |
Neutral |
Neutral |
Corporate
Bonds (ETF) |
108.48, 0.75% |
Neutral |
Neutral |
High Yield
Bonds (ETF) |
95.21, -0.57% |
Bearish |
Bearish |
US 10-year
Bond Yield |
4.25%, 0.05% |
Neutral |
Neutral |
NYSE
Summation Index |
-195, 4% |
Bullish |
Neutral |
US Vix |
21.65, 12.29% |
Bearish |
Neutral |
S & P
500 Skew |
139 |
Neutral |
Neutral |
CNN Fear
& Greed Index |
Extreme Fear |
Bullish |
Neutral |
Nifty MMI
Index |
Extreme
Greed |
Neutral |
Bearish |
20 DMA, S
& P 500 |
5688, Below |
Bearish |
Neutral |
50 DMA, S
& P 500 |
5900, Below |
Bearish |
Neutral |
200 DMA, S
& P 500 |
5759, Below |
Bearish |
Neutral |
20 DMA,
Nifty |
22815, Above |
Neutral |
Bullish |
50 DMA,
Nifty |
22999, Above |
Neutral |
Bullish |
200 DMA,
Nifty |
24076, Below |
Neutral |
Bearish |
S & P
500 P/E |
27.80 |
Bearish |
Neutral |
Nifty P/E |
21.37 |
Neutral |
Bearish |
India Vix |
12.72, 1.13% |
Neutral |
Bearish |
Dollar/Rupee |
85.53, -0.53% |
Neutral |
Bullish |
Overall |
S
& P 500 |
Nifty |
|
Bullish
Indications |
5 |
7 |
|
Bearish
Indications |
8 |
7 |
|
Outlook |
Bearish |
Neutral |
|
Observation |
The S&P fell, and the Nifty rose last
week. Indicators are bearish for the week. Markets have
topped. Watch those stops. |
||
On
the Horizon |
US – Employment
data, Eurozone – CPI |
||
*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 fell, and
the Nifty rose last week. Indicators are bearish for the
week. Markets have topped. We are transitioning from an
inflationary regime to a deflationary one. The sentiment is extremely
fearful. Carry trade liquidation may resume quickly, as the S & P is below
the 200 DMA near 5760, which will likely act as resistance to this oversold
bounce. The macro environment is rapidly deteriorating. The massive
breakdown in transports is quite ominous. The Nifty has corrected significantly
from recent highs and will likely underperform.
The past week saw US equity markets fall.
Most emerging markets fell even as interest rates were little changed.
Transports were unchanged. The Baltic dry fell. The dollar was unchanged.
Commodities were also unchanged. Valuations are expensive, market breadth rebounded,
and the sentiment is fearful. Fear (S&P 500) is back in vogue.
After this rally, a currency crisis
should resume and push risky assets to new lows. Despite the recent
inflationary spike, deflation is in the air, and bonds are telegraphing just
that. 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 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 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 should continue breaking to the downside as earnings growth falters. The Fed has aggressively tightened into a recession. Deflationary
busts often begin after major inflationary scares. The Dollar, commodities, and
bond yields are flashing significant warning signs.
Global yield curves have inverted a
second time after the recent steepening,
reflecting the arrival of a significant economic slowdown. This
inversion following the recent steepening of the yield curve, after the first
inversion, 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 5595 (up) and 5570 (down) on the S&P 500 and 23600 (up) and 23450
(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 again and is a sell on every rise. Gold
increasingly looks like the asset class to own over the next decade (short-term
resistance at 3200). Gold exploded almost eight times higher over the decade
following the dot-com bust in 2000. Imagine what would happen to gold as this
AI bubble bursts. You can check out last week’s
report for a comparison. I love your
thoughts and feedback.