Indicator |
Weekly Level / Change |
Implication for S & P 500 |
Implication for Nifty* |
S & P 500 |
3693, - 4.65% |
Bearish |
Bearish |
Nifty |
17327, - 1.16% |
Neutral ** |
Bearish |
China Shanghai Index |
3088, - 1.22% |
Bearish |
Bearish |
Gold |
1652, - 1.89% |
Bearish |
Bearish |
WTIC Crude |
79.43, - 6.67% |
Bearish |
Bearish |
Copper |
3.35, - 4.78% |
Bearish |
Bearish |
Baltic Dry Index |
1816, 16.93% |
Bullish |
Bullish |
Euro |
0.9690, - 3.25% |
Bearish |
Bearish |
Dollar/Yen |
143.34, 0.30% |
Neutral |
Neutral |
Dow Transports |
12129, - 5.43% |
Bearish |
Bearish |
Corporate Bonds (ETF) |
104.81, - 2.14% |
Bearish |
Bearish |
High Yield Bonds (ETF) |
88.81, - 2.74% |
Bearish |
Bearish |
US 10-year Bond Yield |
3.69%, 6.71% |
Bearish |
Bearish |
NYSE Summation Index |
-514, - 281% |
Bearish |
Neutral |
US Vix |
29.92, 13.76% |
Bearish |
Bearish |
Skew |
119 |
Neutral |
Neutral |
CNN Fear & Greed |
Extreme Fear |
Bullish |
Bullish |
20 DMA, S & P 500 |
3932, Below |
Bearish |
Neutral |
50 DMA, S & P 500 |
4039, Below |
Bearish |
Neutral |
200 DMA, S & P 500 |
4239, Below |
Bearish |
Neutral |
20 DMA, Nifty |
17691, Below |
Neutral |
Bearish |
50 DMA, Nifty |
17341, Below |
Neutral |
Bearish |
200 DMA, Nifty |
16993, Above |
Neutral |
Bullish |
S & P 500 P/E |
18.66 |
Bearish |
Neutral |
Nifty P/E |
20.69 |
Neutral |
Bearish |
India Vix |
20.59, 3.88% |
Neutral |
Bearish |
Dollar/Rupee |
81.25, 1.96% |
Neutral |
Bearish |
Overall |
S & P 500 |
Nifty |
|
Bullish Indications |
2 |
3 |
|
Bearish Indications |
16 |
17 |
|
Outlook |
Bearish |
Bearish |
|
Observation |
The S
and P and the Nifty fell last week. Indicators are bearish for the week. The markets are on
the verge of making new lows. Watch those stops. |
||
On the Horizon |
US – GDP,
UK – GDP, Eurozone – German GDP, 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 and P
and the Nifty fell last week. Indicators are bearish for the week. We have
been selling off from resistance near the 200 DMA on the S &
P and the sell-off is likely to continue with bounces being sold into. The market is oversold, so a
bounce is due. The past week saw a fall in global markets, with a
continued rise in interest rates. Transports are leading on the downside after
making new recent lows.
The Baltic dry
index rebounded after absolutely cratering in the last few weeks. The dollar gained
following a hawkish FED and has taken out recent highs. Commodities continue to
fall. The Nifty which has been out-performing is catching up with other
assets to the downside. Valuations are expensive, market breadth is
weakening, and the sentiment is strongly negative.
The upcoming
currency crisis should push risky assets to new lows across
the board. Deflation is in the air despite the recent
inflationary spike and the Chinese Yuan, Euro, government bonds, and
commodities are telegraphing just that. Feels like a 2000-style
recession trade has begun, with a decline in risk assets across
the board. (My views don’t matter, kindly pay attention to the levels).
The S&P
500 is below the 200 DMA and recently failed at this important mark,
after spending a very long time above it, and its 200 DMA is declining. Monthly
MACDs on most global markets are still negative. This
spells trouble and opens up significant downside risk ahead.
We have got
bounces without capitulation. This suggests the lows may not be in
and the regime is changing from buying the dip to selling the rip. We
may get a final flush down soon. Risky assets are
breaking to the downside across the board. Downward earnings revisions are
likely soon.
The Fed is aggressively
tightening into a recession. Tail risk while moderating is
still high. Deflationary busts often begin after major inflationary
scares. The market has corrected significantly and more is left on the
downside.
The Dollar, commodities,
transports, and, bond yields are continuing to flash major
warning signs despite the recent counter-trend move up. The epic correction
signal occurred with retail, hedge funds, and speculators all in, in the recent
melt-up in January, suggesting a major top is in. The moment
of reckoning is here. Technicals are tracking fundamentals and have
recently turned bearish. 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 Depression (the 1930s) first collapse and we have rallied
over 120% in our most recent rally of the lows in the last 2-year period. After
extreme euphoria for the indices, a highly probable selloff to the 3500 area
is emerging on the S and P, and 15000 should
arrive on the Nifty in the next few months. Central banks are
repeating the Japan experiment and the 3 lost decades in Japan (1989-2019) are
set to repeat across the globe.
The trend has
changed from bullish to bearish and the markets are getting a reality check and
getting smashed by rising rates and a strong dollar.
Looking for significant underperformance in the Nifty going forward on rapidly
deteriorating macros. Yield curves are inverting yet again reflecting a
major upcoming recession.
The critical
levels to watch for the week are 3715 (up) and 3680 (down) on
the S & P 500 and 17400 (up) and 17250 (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 yet
again and will likely prove to be a sell on every rise. Gold is
increasingly looking like the asset class to own in the upcoming decade
despite the recent selloff. You can check out last week’s report for a
comparison. Love your thoughts and feedback.
No comments:
Post a Comment