Indicator |
Weekly Level / Change |
Implication for S & P 500 |
Implication for Nifty* |
S & P 500 |
4026, 1.53% |
Bullish |
Bullish |
Nifty |
18513, 1.12% |
Neutral ** |
Bullish |
China Shanghai Index |
3102, 0.14% |
Neutral |
Neutral |
Gold |
1755, 0.03% |
Neutral |
Neutral |
WTIC Crude |
76.55, - 4.55% |
Bearish |
Bearish |
Copper |
3.63, - 0.44% |
Neutral |
Neutral |
Baltic Dry Index |
1324, 12.49% |
Bullish |
Bullish |
Euro |
1.0402, 0.69% |
Bullish |
Bullish |
Dollar/Yen |
139.12, - 0.82% |
Bearish |
Bearish |
Dow Transports |
14443, 1.32% |
Bullish |
Bullish |
Corporate Bonds (ETF) |
107.77, 1.85% |
Bullish |
Bullish |
High Yield Bonds (ETF) |
91.94, 1.01% |
Bullish |
Bullish |
US 10-year Bond Yield |
3.69%, - 3.22% |
Bullish |
Bullish |
NYSE Summation Index |
148, 3006% |
Bullish |
Neutral |
US Vix |
20.50, - 11.33% |
Bullish |
Bullish |
Skew |
128 |
Neutral |
Neutral |
CNN Fear & Greed
Index |
Greed |
Bearish |
Bearish |
20 DMA, S & P 500 |
3902, Above |
Bullish |
Neutral |
50 DMA, S & P 500 |
3793, Above |
Bullish |
Neutral |
200 DMA, S & P 500 |
4057, Below |
Bearish |
Neutral |
20 DMA, Nifty |
18220, Above |
Neutral |
Bullish |
50 DMA, Nifty |
17720, Above |
Neutral |
Bullish |
200 DMA, Nifty |
17040, Above |
Neutral |
Bullish |
S & P 500 P/E |
20.94 |
Bearish |
Neutral |
Nifty P/E |
22.25 |
Neutral |
Bearish |
India Vix |
13.33, - 7.35% |
Neutral |
Bullish |
Dollar/Rupee |
81.71, 0.12% |
Neutral |
Neutral |
Overall |
S & P 500 |
Nifty |
|
Bullish Indications |
11 |
13 |
|
Bearish Indications |
5 |
4 |
|
Outlook |
Bullish |
Bullish |
|
Observation |
The S
and P and the Nifty rallied last week. Indicators are bullish for the week. The markets are topping.
Watch those stops. |
||
On the Horizon |
Eurozone –
German employment data, German CPI, CPI, US – GDP, employment data |
||
*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 rallied last week. Indicators are bullish for the
week. We are failing at resistance near the 200
DMA on the S & P and a sell-off is likely with bounces being sold
into. The recent bounce is topping 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).
A dollar rebound the likely catalyst.
The past week
saw a rise in most global equity markets, as interest rates fell. Transports led
the move up. The Baltic dry index rebounded. The dollar fell. Commodities did
not participate in the risk on move. 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, commodities, and Yen
are telegraphing just that. Feels like a 2008-style recession trade
has begun, with a potential 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 4040 (up) and 4015 (down) on
the S & P 500 and 18600 (up) and 18450 (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. You can check out last week’s report for a
comparison. Love your thoughts and feedback.
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