|
Asset Class |
Weekly Level / Change |
Implication for S & P 500 |
Implication for Nifty* |
|
S & P
500 |
4755, 0.75% |
Bullish |
Bullish |
|
Nifty |
21349, -0.50% |
Neutral ** |
Bearish |
|
China
Shanghai Index |
2915, -0.94% |
Bearish |
Bearish |
|
Gold |
2065, 1.18% |
Bullish |
Bullish |
|
WTIC Crude |
73.49, 1.41% |
Bullish |
Bullish |
|
Copper |
3.90, 0.37% |
Neutral |
Neutral |
|
CRB Index |
267, 0.57% |
Bullish |
Bullish |
|
Baltic Dry
Index |
2094, -10.82% |
Bearish |
Bearish |
|
Euro |
1.1015, 0.85% |
Bullish |
Bullish |
|
Dollar/Yen |
142.37, -0.17% |
Neutral |
Neutral |
|
Dow Transports |
16064, 0.30% |
Neutral |
Neutral |
|
Corporate
Bonds (ETF) |
110.10, 0.18% |
Neutral |
Neutral |
|
High Yield
Bonds (ETF) |
94.84, 0.66% |
Bullish |
Bullish |
|
US 10-year
Bond Yield |
3.90%, -0.87% |
Bullish |
Bullish |
|
NYSE
Summation Index |
921, 24% |
Bullish |
Neutral |
|
US Vix |
13.03, 3.74% |
Bearish |
Bearish |
|
Skew |
135 |
Neutral |
Neutral |
|
CNN Fear
& Greed Index |
Extreme Greed |
Bearish |
Bearish |
|
20 DMA, S
& P 500 |
4641, Above |
Bullish |
Neutral |
|
50 DMA, S
& P 500 |
4468, Above |
Bullish |
Neutral |
|
200 DMA, S
& P 500 |
4336, Above |
Bullish |
Neutral |
|
20 DMA,
Nifty |
20831, Above |
Neutral |
Bullish |
|
50 DMA,
Nifty |
20021, Above |
Neutral |
Bullish |
|
200 DMA,
Nifty |
19060,
Above |
Neutral |
Bullish |
|
S & P
500 P/E |
26.27 |
Bearish |
Neutral |
|
Nifty P/E |
22.81 |
Neutral |
Bearish |
|
India Vix |
13.71, 4.42% |
Neutral |
Bearish |
|
Dollar/Rupee |
83.17, 0.03% |
Neutral |
Neutral |
|
Overall |
S
& P 500 |
Nifty |
|
|
Bullish
Indications |
11 |
10 |
|
|
Bearish
Indications |
5 |
7 |
|
|
Outlook |
Bullish |
Bullish |
|
|
Observation |
The
S&P 500 rallied and the Nifty fell last week. Indicators are bullish for
the week. Markets are
at resistance. 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&P 500 rallied and the Nifty fell last week. Indicators are bullish for the week. Markets are at resistance, as we enter bullish seasonality. We are transitioning from an inflationary regime to a deflationary collapse. The Nifty has caught up to the upside. We are way overbought short-term and will likely pull back here sharply.
The past week saw US equity
markets rally. Most emerging markets were unchanged, as interest rates fell.
Transports were unchanged. The Baltic dry index fell. The dollar fell.
Commodities rose. Valuations continue to be quite expensive, market breadth improved,
and the sentiment is now exuberant. Fear abated this week, as a possible
reality check from a FED Pivot looms.
After this rally, the recent
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 bonds
are telegraphing just that. Feels like a 2008-style recession trade has begun,
with a potential for a decline in risk assets across the board. The current
market is tracking closely the 2000 moves down in the S&P
500, implying a panic low right ahead in the upcoming months (My views do not
matter, kindly pay attention to the levels). A dollar rebound from major
support is a likely catalyst.
The S&P 500 is encountering
resistance near its recent highs. We have bounced 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, as downward earnings revisions are underway.
The Fed has aggressively tightened
into a recession. Deflationary busts often begin after major inflationary
scares. The market has rebounded after correcting 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 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.
Global yield curves have inverted
significantly reflecting
a major upcoming recession. The recent steepening of the
yield curve, within an inverted context, with rates falling, is a precursor to
the next recession, and the riskiest assets will underperform going forward
under such conditions.
The critical levels to watch for
the week are 4765 (up) and 4745 (down) on the S&P 500 and 21450 (up) and 21250
(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 over the next decade. (Gold exploded almost
8 times higher over the decade following the dot-com bust in 2000, just imagine
what would happen when this AI bubble bursts? following the recent crypto bubble
burst) You can check out last week’s report for a comparison. Love your
thoughts and feedback.
