Asset Class |
Weekly Level / Change |
Implication for S & P 500 |
Implication for Nifty* |
S & P 500 |
3845, -0.20% |
Neutral |
Neutral |
Nifty |
17807, -2.53% |
Neutral ** |
Bearish |
China Shanghai Index |
3046, -3.85% |
Bearish |
Bearish |
Gold |
1806, 0.32% |
Neutral |
Neutral |
WTIC Crude |
79.35, 6.58% |
Bullish |
Bullish |
Copper |
3.81, 1.37% |
Bullish |
Bullish |
Baltic Dry Index |
1515, -2.88% |
Bearish |
Bearish |
Euro |
1.0613, 0.29% |
Neutral |
Neutral |
Dollar/Yen |
132.80, -2.85% |
Bearish |
Bearish |
Dow Transports |
13565, -1.26% |
Bearish |
Bearish |
Corporate Bonds (ETF) |
107.06, -1.83% |
Bearish |
Bearish |
High Yield Bonds (ETF) |
90.98, -0.93% |
Bearish |
Bearish |
US 10-year Bond Yield |
3.75%, 6.82% |
Bearish |
Bearish |
NYSE Summation Index |
-58, -141% |
Bearish |
Neutral |
US Vix |
20.87, -7.74% |
Bullish |
Bullish |
Skew |
115 |
Neutral |
Neutral |
CNN Fear & Greed Index |
Fear |
Bullish |
Bullish |
20 DMA, S & P 500 |
3943, Below |
Bearish |
Neutral |
50 DMA, S & P 500 |
3886, Below |
Bearish |
Neutral |
200 DMA, S & P 500 |
4017, Below |
Bearish |
Neutral |
20 DMA, Nifty |
18492, Below |
Neutral |
Bearish |
50 DMA, Nifty |
18168, Below |
Neutral |
Bearish |
200 DMA, Nifty |
17178, Above |
Neutral |
Bullish |
S & P 500 P/E |
20.00 |
Bearish |
Neutral |
Nifty P/E |
21.40 |
Neutral |
Bearish |
India Vix |
16.16, 14.85% |
Neutral |
Bearish |
Dollar/Rupee |
82.79, 0.10% |
Neutral |
Neutral |
Overall |
S & P 500 |
Nifty |
|
Bullish Indications |
4 |
5 |
|
Bearish Indications |
12 |
12 |
|
Outlook |
Bearish |
Bearish |
|
Observation |
The S and P was unchanged and the
Nifty fell last week. Indicators are bearish for the week. The markets have topped. Watch those stops. |
||
On the Horizon |
|||
*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 500 was unchanged and the Nifty
fell last week. Indicators are bearish for the week. The
recent bounce has topped near the 200 DMA close to 4100 and decisive downside
has resumed as we transition from an inflationary regime to a deflationary
collapse. We had 2 months of upside in October and
November, and that’s all she wrote in a bear market. Santa looks
to be stuck in the chimney this time around as the dominant
trend reasserts itself. The market is tracking
closely the 1973/2008 moves 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 being the
likely catalyst.
The past week saw relative calm in most
global equity markets, emerging markets underperformed with a rise in interest
rates. Transports fell. The Baltic dry index also fell. The dollar fell
slightly. Commodities rebounded. Valuations are very expensive, market breadth
is falling, and the sentiment is turning negative. No fear yet though, as
complacency reigns characterized by low volatility. We may get an oversold
bounce this week after which more downside is likely.
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. It 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 3855 (up) and 3835 (down) on the S & P 500
and 17900 (up) and 17700 (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. You can
check out last week’s report for a comparison.
Love your thoughts and feedback.
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