‘Indicator |
Weekly Level / Change |
Implication for S & P 500 |
Implication for Nifty* |
S & P 500 |
3934, -3.37% |
Bearish |
Bearish |
Nifty |
18497, -1.07% |
Neutral ** |
Bearish |
China Shanghai Index |
3207, 1.61% |
Bullish |
Bullish |
Gold |
1809, -0.01% |
Neutral |
Neutral |
WTIC Crude |
71.59, -11.78% |
Bearish |
Bearish |
Copper |
3.86, 0.16% |
Neutral |
Neutral |
Baltic Dry Index |
1386, 4.68% |
Bullish |
Bullish |
Euro |
1.0534, -0.04% |
Neutral |
Neutral |
Dollar/Yen |
136.57, 1.69% |
Bullish |
Bullish |
Dow Transports |
13763, -5.22% |
Bearish |
Bearish |
Corporate Bonds (ETF) |
108.86, -0.51% |
Bearish |
Bearish |
High Yield Bonds (ETF) |
91.87, -0.73% |
Bearish |
Bearish |
US 10-year Bond Yield |
3.59%, 1.96% |
Bearish |
Bearish |
NYSE Summation Index |
244, -27% |
Bearish |
Neutral |
US Vix |
22.83, 19.78% |
Bearish |
Bearish |
Skew |
119 |
Neutral |
Neutral |
CNN Fear & Greed
Index |
Neutral |
Neutral |
Neutral |
20 DMA, S & P 500 |
3987, Below |
Bearish |
Neutral |
50 DMA, S & P 500 |
3840, Above |
Bullish |
Neutral |
200 DMA, S & P 500 |
4037, Above |
Bullish |
Neutral |
20 DMA, Nifty |
18496, Above |
Neutral |
Bullish |
50 DMA, Nifty |
17917, Above |
Neutral |
Bullish |
200 DMA, Nifty |
17105, Above |
Neutral |
Bullish |
S & P 500 P/E |
20.46 |
Bearish |
Neutral |
Nifty P/E |
22.23 |
Neutral |
Bearish |
India Vix |
13.48, 0.20% |
Neutral |
Neutral |
Dollar/Rupee |
82.42, 1.24% |
Neutral |
Bearish |
Overall |
S & P 500 |
Nifty |
|
Bullish Indications |
5 |
7 |
|
Bearish Indications |
10 |
10 |
|
Outlook |
Bearish |
Bearish |
|
Observation |
The S
and P and the Nifty fell last week. Indicators are bearish for the week. The markets are topping.
Watch those stops. |
||
On the Horizon |
US – CPI,
FOMC rate decision, UK – GDP, Employment |
||
*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 past week
saw a fall in most global equity markets, as interest rates rose. Transports led
the move down. The Baltic dry index rebounded. The dollar was unchanged.
Commodities were unchanged, though oil continued its recent collapse.
Valuations are very expensive, market breadth is falling, and the sentiment is
neutral. No fear yet though, as complacency reigns despite a rebound in
volatility.
The ongoing
currency crisis should resume and 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 failing near the 200 DMA and is encountering resistance near 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 from
recent lows 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 should
continue 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 despite
recent counter-trend moves.
The epic
correction signal occurred with retail, hedge funds, and speculators all in, in
January 2022, suggesting a major top is in. The moment of
reckoning is here. 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 3945 (up) and 3920 (down) on
the S & P 500 and 18600 (up) and 18400 (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.
No comments:
Post a Comment