Indicator |
Weekly Level / Change |
Implication for S & P 500 |
Implication for Nifty* |
S & P 500 |
3965, - 0.69% |
Bearish |
Bearish |
Nifty |
18308, - 0.23% |
Neutral ** |
Neutral |
China Shanghai Index |
3097, 0.32% |
Neutral |
Neutral |
Gold |
1752, - 0.98% |
Bearish |
Bearish |
WTIC Crude |
80.11, - 9.95% |
Bearish |
Bearish |
Copper |
3.64, - 7.04% |
Bearish |
Bearish |
Baltic Dry Index |
1189, - 12.25% |
Bearish |
Bearish |
Euro |
1.0324, - 0.27% |
Neutral |
Neutral |
Dollar/Yen |
140.37, 1.14% |
Bullish |
Bullish |
Dow Transports |
14255, - 2.06% |
Bearish |
Bearish |
Corporate Bonds (ETF) |
105.81, 1.19% |
Bullish |
Bullish |
High Yield Bonds (ETF) |
91.02, - 0.15% |
Neutral |
Neutral |
US 10-year Bond Yield |
3.83%, 0.05% |
Neutral |
Neutral |
NYSE Summation Index |
- 5, 97% |
Bullish |
Neutral |
US Vix |
23.12, 2.66% |
Bearish |
Bearish |
Skew |
115 |
Neutral |
Neutral |
CNN Fear & Greed
Index |
Greed |
Bearish |
Bearish |
20 DMA, S & P 500 |
3866, Above |
Bullish |
Neutral |
50 DMA, S & P 500 |
3790, Above |
Bullish |
Neutral |
200 DMA, S & P 500 |
4067, Below |
Bearish |
Neutral |
20 DMA, Nifty |
18039, Above |
Neutral |
Bullish |
50 DMA, Nifty |
17663, Above |
Neutral |
Bullish |
200 DMA, Nifty |
17016, Above |
Neutral |
Bullish |
S & P 500 P/E |
20.62 |
Bearish |
Neutral |
Nifty P/E |
21.79 |
Neutral |
Bearish |
India Vix |
14.39, - 0.10% |
Neutral |
Neutral |
Dollar/Rupee |
81.65, 1.45% |
Neutral |
Bearish |
Overall |
S & P 500 |
Nifty |
|
Bullish Indications |
5 |
5 |
|
Bearish Indications |
10 |
10 |
|
Outlook |
Bearish |
Bearish |
|
Observation |
The S
and P rallied and the Nifty was unchanged last week. Indicators are bearish
for the week. The markets are failing
at resistance. Watch those stops. |
||
On the Horizon |
Eurozone –
German GDP |
||
*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 little changed last week. Indicators are bearish for
the week. We have failed at resistance near the 200
DMA on the S & P and the sell-off is likely to continue with bounces
being sold into. The recent bounce has topped near the 200 DMA close
to 4100 and decisive downside should resume as we transition from an
inflationary regime to a deflationary collapse. The market is
tracking closely the 2008 move down in the S and P, implying a panic low right
ahead in the upcoming months (My views don’t matter, kindly pay attention
to the levels).
The past week
saw a fall in most global markets, despite rates being little changed.
Transports fell. The Baltic dry index continued to crater. The dollar rebounded.
Commodities fell across the board led by oil. Valuations are very expensive,
market breadth is improving, and so has the sentiment. No fear yet though, as
complacency reigns following a collapse in volatility.
The ongoing
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, and Yen are
telegraphing just that. Feels like a 2008-style recession trade has
begun, with a decline in risk assets across the board.
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
underway.
The Fed is aggressively
tightening into a recession. Deflationary busts often begin after
major inflationary scares. The market has corrected significantly and more
is left on the downside. The Dollar, commodities, and, bond
yields are continuing to flash major warning signs.
The epic
correction signal occurred with retail, hedge funds, and speculators all in, 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 3300 area
is emerging on the S and P, and 15000 should
arrive on the Nifty in the next few months. The Nifty
which has been out-performing will likely catch up with other assets on the
downside soon.
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 have inverted significantly
reflecting a major upcoming recession.
The critical
levels to watch for the week are 3975 (up) and 3955 (down) on
the S & P 500 and 18400 (up) and 18250 (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.
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