|
Indicator |
Weekly
Level / Change |
Implication
for S
& P 500 |
Implication
for Nifty* |
|
S
& P 500 |
4327,
-0.97% |
Bearish |
Bearish |
|
Nifty |
15923,
1.49% |
Neutral
** |
Bullish |
|
China
Shanghai Index |
3539,
0.43% |
Neutral |
Neutral |
|
Gold |
1813,
0.11% |
Neutral |
Neutral |
|
WTIC
Crude |
71.46,
-4.16% |
Bearish |
Bearish |
|
Copper |
4.31,
-1.08% |
Bearish |
Bearish |
|
Baltic
Dry Index |
3039,
-7.91% |
Bearish |
Bearish |
|
Euro |
1.1806,
-0.56% |
Bearish |
Bearish |
|
Dollar/Yen |
110.05,
-0.08% |
Neutral |
Neutral |
|
Dow
Transports |
14492,
-2.36% |
Bearish |
Bearish |
|
High
Yield (Bond ETF) |
109.57,
-0.35% |
Neutral |
Neutral |
|
US
10 year Bond Yield |
1.30%,
-4.62% |
Bullish |
Bullish |
|
NYSE
Summation Index |
364,
-34.25% |
Bearish |
Neutral |
|
US
Vix |
18.45,
14.03% |
Bearish |
Bearish |
|
Skew |
152 |
Bearish |
Bearish |
|
20
DMA, S & P 500 |
4309,
Above |
Bullish |
Neutral |
|
50
DMA, S & P 500 |
4239,
Above |
Bullish |
Neutral |
|
200
DMA, S & P 500 |
3891,
Above |
Bullish |
Neutral |
|
20
DMA, Nifty |
15785,
Above |
Neutral |
Bullish |
|
50
DMA, Nifty |
15538,
Above |
Neutral |
Bullish |
|
200
DMA, Nifty |
14196,
Above |
Neutral |
Bullish |
|
S
& P 500 P/E |
45.97 |
Bearish |
Neutral |
|
Nifty
P/E |
28.53 |
Neutral |
Bearish |
|
India
Vix |
11.71,
-9.56% |
Neutral |
Bullish |
|
Dollar/Rupee |
74.61,
0.17% |
Neutral |
Neutral |
|
Overall |
S
& P 500 |
Nifty |
|
|
Bullish
Indications |
4 |
6 |
|
|
Bearish
Indications |
9 |
9 |
|
|
Outlook |
Bearish |
Bearish |
|
|
Observation |
The
S and P fell and the Nifty was up last week. Indicators are bearish for the
week. The
markets are beginning a correction. Watch those stops. |
||
|
On
the Horizon |
Eurozone – ECB rate decision, China -
PBOC 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 and P fell and
the Nifty was up last week. Indicators are bearish for
the week. Deflation is in the air. Earnings revisions have been very
good but it is already in the price. Typical late-cycle FED put stuff is
leading to a taper tantrum and an imminent top. Tail
risk has skyrocketed with the Skew/Vix ratio recently touching double
digits. The market is about to begin an epic correction. Deflationary busts
often begin after inflationary scares (the market is calling the Fed’s bluff)
and long bonds are telegraphing just that. Transports, the Dollar,
market breadth, and the skew are flashing major warning signs.
The epic correction signal is alive and well with retail, hedge funds, and
speculators all in, despite the recent melt-up, 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 90% 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 3700 area is emerging on the S and P, and 12000 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) are 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 that 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 4340 (up) and 4315 (down) on the S & P 500
and 16000 (up) and 15850 (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). You can check out last week’s report for a comparison. Love your thoughts
and feedback.
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