|
Indicator |
Weekly
Level / Change |
Implication
for S
& P 500 |
Implication
for Nifty* |
|
S
& P 500 |
4204,
1.16% |
Bullish |
Bullish |
|
Nifty |
15436,
1.72% |
Neutral
** |
Bullish |
|
China
Shanghai Index |
3601,
3.28% |
Bullish |
Bullish |
|
Gold |
1905,
1.12% |
Bullish |
Bullish |
|
WTIC
Crude |
66.66,
4.84% |
Bullish |
Bullish |
|
Copper |
4.67,
4.26% |
Bullish |
Bullish |
|
Baltic
Dry Index |
2596,
-9.52% |
Bearish |
Bearish |
|
Euro |
1.2194,
0.12% |
Neutral |
Neutral |
|
Dollar/Yen |
109.86,
0.84% |
Bullish |
Bullish |
|
Dow
Transports |
15750,
1.77% |
Bullish |
Bullish |
|
High
Yield (Bond ETF) |
108.91,
0.15% |
Neutral |
Neutral |
|
US
10 year Bond Yield |
1.58%,
-2.40% |
Bullish |
Bullish |
|
NYSE
Summation Index |
592,
10.47% |
Bullish |
Neutral |
|
US
Vix |
16.76,
-16.82% |
Bullish |
Bullish |
|
Skew |
155 |
Bearish |
Bearish |
|
20
DMA, S & P 500 |
4168,
Above |
Bullish |
Neutral |
|
50
DMA, S & P 500 |
4115,
Above |
Bullish |
Neutral |
|
200
DMA, S & P 500 |
3744,
Above |
Bullish |
Neutral |
|
20
DMA, Nifty |
14936,
Above |
Neutral |
Bullish |
|
50
DMA, Nifty |
14762,
Above |
Neutral |
Bullish |
|
200
DMA, Nifty |
13429,
Above |
Neutral |
Bullish |
|
S
& P 500 P/E |
44.66 |
Bearish |
Neutral |
|
Nifty
P/E |
28.98 |
Neutral |
Bearish |
|
India
Vix |
17.40,
-8.79% |
Neutral |
Bullish |
|
Dollar/Rupee |
72.41,
-0.56% |
Neutral |
Bullish |
|
Overall |
S
& P 500 |
Nifty |
|
|
Bullish
Indications |
13 |
15 |
|
|
Bearish
Indications |
3 |
3 |
|
|
Outlook |
Bullish |
Bullish |
|
|
Observation |
The
S and P and the Nifty rallied last week. Indicators are bullish for the week. The
markets are about to begin a great depression style collapse.
Watch those stops. |
||
|
On
the Horizon |
Eurozone – German employment data, CPI, US - Employment data, India – RBI rate decision |
||
|
*Nifty |
India’s
Benchmark Stock Market Index |
||
|
Raw
Data |
Courtesy
Stock charts, investing.com, multpl.com, NSE |
||
|
**Neutral |
Changes
less than 0.5% are considered neutral |
The S & P 500 and the Nifty rallied last week. Indicators
are bullish for the week. Earnings growth in the recent quarter has been very
good but it is already in the price. Typical late-cycle FED put stuff has given
way to a sell in May. The market is on the verge of an epic correction.
Deflationary busts often begin after inflationary scares (the market is calling
the Fed’s bluff) and gold is telegraphing just that. Transports and the skew are flashing early warning signs. The epic crash signal is alive and well with
retail, hedge funds, and speculators all in, despite the recent melt-up and
break out of the long-term broadening top, suggesting a major top is imminent.
The moment of reckoning is very near.
Technicals are about to track fundamentals and turn bearish. The market
is yet to price in one of the worst earnings decline periods in stock market
history. With extremely high valuations, a crash is on the menu. Extremely low
volatility suggests complacency and downside ahead.
We rallied 46% right after the great depressions (1930’s), first collapse and we have rallied over 80% in our most recent rally of the
lows in the last 12 month period. After extreme euphoria for the indices, a
highly probable selloff to the 3000 area is emerging on the S and P, and 10000 should
arrive on the Nifty in the next few months. The FED is repeating the Japan
experiment and the 3 lost decades in Japan (1989-2019) is set to repeat across
the globe. SPX 1500 and lower in a year and we stay there till 2030, scary? The
markets are very close to an epic meltdown and the SPX is headed way lower.
The markets are overvalued, overbought and out of touch with
economic realities. Long term, the epic meltdown is set to continue resulting
in a 5 year plus bear market with lot lower levels may be as low as 800 on the
S and P. QE forever from the FED is about to trigger the deflationary collapse
of the century as we make a major top in global equity markets. The market is
looking like the short of a lifetime with topping action in the transports, other
global indices, and commodities. High valuations continue.
The recent global virus epidemic (black swan) has dented
global GDP significantly and will usher in a depression much faster than most
think. The trend is about to change from bullish to bearish and the markets are
about to get smashed by a rebounding dollar. Looking for significant
underperformance in the Nifty going forward on rapidly deteriorating macros. A
5-year deflationary wave has started in key asset classes like the Euro,
stocks, and commodities amidst several bearish divergences and overstretched
valuations.
We are entering a multi-year great depression. The markets
are still trading well over 3 standard deviations above their long-term
averages from which corrections usually result. Tail risk has been very high of
late as interest rates are about to plunge yet again reflecting a major
recession. The critical levels to watch for the week are 4215 (up) and 4090 (down) on the S & P 500 and 15500 (up) and 15350
(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 is about to get torched soon (despite the bullish
consensus emerging). Gold will
likely prove to be the best asset class in the next 5 years. You can check out last week’s report for a comparison. Love
your thoughts and feedback.
