|
Indicator |
Weekly
Level / Change |
Implication
for S
& P 500 |
Implication
for Nifty* |
|
S
& P 500 |
4432,
0.77% |
Bullish |
Bullish |
|
Nifty |
17102,
-2.92% |
Neutral
** |
Bearish |
|
China
Shanghai Index |
3361,
-4.57% |
Bearish |
Bearish |
|
Gold |
1790,
-2.28% |
Bearish |
Bearish |
|
WTIC
Crude |
87.31,
2.55% |
Bullish |
Bullish |
|
Copper |
4.33,
-4.56% |
Bearish |
Bearish |
|
Baltic
Dry Index |
1381,
-2.40% |
Bearish |
Bearish |
|
Euro |
1.1150,
-1.68% |
Bearish |
Bearish |
|
Dollar/Yen |
115.22,
1.35% |
Bullish |
Bullish |
|
Dow
Transports |
15049,
-1.30% |
Bearish |
Bearish |
|
Corporate
Bonds (ETF) |
127.70,
-0.93% |
Bearish |
Bearish |
|
High
Yield Bonds (ETF) |
105.58,
-0.95% |
Bearish |
Bearish |
|
US 10-year
Bond Yield |
1.78%,
0.32% |
Neutral |
Neutral |
|
NYSE
Summation Index |
-549,
-225% |
Bearish |
Neutral |
|
US
Vix |
27.66,
-4.12% |
Bullish |
Bullish |
|
Skew |
133 |
Neutral |
Neutral |
|
20
DMA, S & P 500 |
4586,
Below |
Bearish |
Neutral |
|
50
DMA, S & P 500 |
4636,
Below |
Bearish |
Neutral |
|
200
DMA, S & P 500 |
4435,
Below |
Bearish |
Neutral |
|
20
DMA, Nifty |
17771,
Below |
Neutral |
Bearish |
|
50
DMA, Nifty |
17436,
Below |
Neutral |
Bearish |
|
200
DMA, Nifty |
16623,
Above |
Neutral |
Bullish |
|
S
& P 500 P/E |
25.27 |
Bearish |
Neutral |
|
Nifty
P/E |
23.10 |
Neutral |
Bearish |
|
India
Vix |
20.70,
9.57% |
Neutral |
Bearish |
|
Dollar/Rupee |
75.00,
0.83% |
Neutral |
Bearish |
|
Overall |
S
& P 500 |
Nifty |
|
|
Bullish
Indications |
4 |
5 |
|
|
Bearish
Indications |
13 |
14 |
|
|
Outlook |
Bearish |
Bearish |
|
|
Observation |
The S and P rallied and the Nifty fell last week.
Indicators are bearish for the week. The
markets have begun a correction. Watch those stops. |
||
|
On
the Horizon |
Eurozone
– German employment
data, CPI, ECB rate decision, US - Employment data, UK -
BOE rate decision, India – Union budget 2022 |
||
|
*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 and rallied
the Nifty fell last week. Indicators are bearish for the week. Deflation is in the
air. Feels like a 2000 style recession trade has begun. The recent rebound may
run into resistance. (My views don’t matter, kindly pay attention to the levels).
The S&P 500 closed below the 200 DMA for 6 consecutive sessions, after spending
a very long time above it. Markets have been making new highs amid loads of
divergences and risky assets are breaking to the downside. Earnings revisions
have been average, but any upward revisions are already in the price.
Typical late-cycle FED put stuff has led to a taper tantrum following
the recent taper announcement from the FED 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.
The
transports, the Dollar, market breadth, corporate bonds, and high yield bonds, are still 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 tracking fundamentals and have turned 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 120% 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 4300 area is emerging on the S and P, and 14000 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 1800
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
strong 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 4445 (up) and 4420 (down) on the S & P
500 and 17200 (up) and 17050 (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 getting torched (despite
the bullish consensus emerging). Gold is increasingly looking like
the asset class to own in the upcoming decade. You can check out last week’s report for a comparison. Love your thoughts
and feedback.
