Indicator |
Weekly Level / Change |
Implication for S & P 500 |
Implication for Nifty* |
S & P 500 |
3640, 1.51% |
Bullish |
Bullish |
Nifty |
17315, 1.29% |
Neutral ** |
Bullish |
China Shanghai Index |
3024, 0.00% |
Neutral |
Neutral |
Gold |
1702, 1.78% |
Bullish |
Bullish |
WTIC Crude |
93.20, 17.25% |
Bullish |
Bullish |
Copper |
3.38, - 0.35% |
Neutral |
Neutral |
Baltic Dry Index |
1961, 11.42% |
Bullish |
Bullish |
Euro |
0.9745, - 0.55% |
Bearish |
Bearish |
Dollar/Yen |
145.35, 0.41% |
Neutral |
Neutral |
Dow Transports |
12477, 3.48% |
Bullish |
Bullish |
Corporate Bonds (ETF) |
102.42, - 0.03% |
Neutral |
Neutral |
High Yield Bonds (ETF) |
88.57, 0.82% |
Bullish |
Bullish |
US 10-year Bond Yield |
3.89%, 2.03% |
Bearish |
Bearish |
NYSE Summation Index |
-974, - 3% |
Bearish |
Neutral |
US Vix |
31.36, - 0.82% |
Bullish |
Bullish |
Skew |
122 |
Neutral |
Neutral |
CNN Fear & Greed |
Extreme Fear |
Bullish |
Bullish |
20 DMA, S & P 500 |
3782, Below |
Bearish |
Neutral |
50 DMA, S & P 500 |
3986, Below |
Bearish |
Neutral |
200 DMA, S & P 500 |
4190, Below |
Bearish |
Neutral |
20 DMA, Nifty |
17448, Below |
Neutral |
Bearish |
50 DMA, Nifty |
17472, Below |
Neutral |
Bearish |
200 DMA, Nifty |
16982, Above |
Neutral |
Bullish |
S & P 500 P/E |
18.39 |
Bearish |
Neutral |
Nifty P/E |
20.90 |
Neutral |
Bearish |
India Vix |
18.81, - 5.88% |
Neutral |
Bullish |
Dollar/Rupee |
82.83, 1.62% |
Neutral |
Bearish |
Overall |
S & P 500 |
Nifty |
|
Bullish Indications |
8 |
11 |
|
Bearish Indications |
7 |
6 |
|
Outlook |
Bullish |
Bullish |
|
Observation |
The S
and P and the Nifty rallied last week. Indicators are bullish for the week. The markets are on
the verge of making new lows. Watch those stops. |
||
On the Horizon |
US – PPI,
CPI, UK – Employment data, GDP, Eurozone – German CPI |
||
*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 rose last week. Indicators are bullish for the week, but
any bullishness is likely to be short-lived. 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 October swoon is here tracking closely
the 2008 move down in the S and P.
The past week
saw a rise in global markets, despite a continued rise in interest rates. Transports
are leading on the downside but rebounded last week after new recent lows. The
Baltic dry index continues to rebound after absolutely cratering in recent months.
The dollar gained following a hawkish FED and is close to recent highs. Commodities
rebounded. The Nifty which has been out-performing will likely catch up with
other assets on the downside soon. 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 has changed 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. 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.
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 3655 (up) and 3625 (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 is getting
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.
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