|
Asset
Class |
Weekly
Level / Change |
Implication
for S & P 500 |
Implication for Nifty* |
|
S
& P 500 |
4117,
-2.53% |
Bearish |
Bearish |
|
Nifty |
19047,
-2.53% |
Neutral
** |
Bearish |
|
China
Shanghai Index |
3018,
1.16% |
Bullish |
Bullish |
|
Gold |
2016,
1.10% |
Bullish |
Bullish |
|
WTIC Crude |
85.16,
-4.05% |
Bearish |
Bearish |
|
Copper |
3.64,
2.25% |
Bullish |
Bullish |
|
CRB
Index |
285, -0.32% |
Neutral |
Neutral |
|
Baltic
Dry Index |
1563,
-23.61% |
Bearish |
Bearish |
|
Euro |
1.0566,
-0.25% |
Neutral |
Neutral |
|
Dollar/Yen |
149.65,
-0.13% |
Neutral |
Neutral |
|
Dow
Transports |
13556,
-6.19% |
Bearish |
Bearish |
|
Corporate
Bonds (ETF) |
99.61,
0.95% |
Bullish |
Bullish |
|
High
Yield Bonds (ETF) |
88.61,
0.58% |
Bullish |
Bullish |
|
US
10-year Bond Yield |
4.85%,
-1.40% |
Bullish |
Bullish |
|
NYSE
Summation Index |
-817,
-33% |
Bearish |
Neutral |
|
US
Vix |
21.27,
-2.03% |
Bullish |
Bullish |
|
Skew |
133 |
Neutral |
Neutral |
|
CNN
Fear & Greed Index |
Extreme
Fear |
Bullish |
Bullish |
|
20
DMA, S & P 500 |
4278,
Below |
Bearish |
Neutral |
|
50
DMA, S & P 500 |
4362,
Below |
Bearish |
Neutral |
|
200
DMA, S & P 500 |
4240,
Below |
Bearish |
Neutral |
|
20
DMA, Nifty |
19529,
Below |
Neutral |
Bearish |
|
50
DMA, Nifty |
19588,
Below |
Neutral |
Bearish |
|
200
DMA, Nifty |
18613,
Above |
Neutral |
Bullish |
|
S
& P 500 P/E |
23.50 |
Bearish |
Neutral |
|
Nifty
P/E |
20.84 |
Neutral |
Bearish |
|
India
Vix |
10.91,
0.81% |
Neutral |
Bearish |
|
Dollar/Rupee |
83.41,
0.32% |
Neutral |
Neutral |
|
Overall |
S
& P 500 |
Nifty |
|
|
Bullish
Indications |
8 |
9 |
|
|
Bearish
Indications |
9 |
9 |
|
|
Outlook |
Bearish |
Neutral |
|
|
Observation |
The
S&P 500 and the Nifty fell last week. Indicators are mixed for the week. Markets
are heading for a bottom soon. Watch those stops. |
||
|
On
the Horizon |
Eurozone – German GDP, German CPI, CPI, US – FOMC rate decision,
Employment data, UK – BOE rate decision |
||
|
*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
and the Nifty fell last week. Indicators are mixed for the
week. Markets are heading for a bottom soon, as we enter bullish
seasonality which is being impacted by rising rates. We are transitioning
from an inflationary regime to a deflationary collapse. The Nifty
is correcting from its recent highs.
The past week saw US
equity markets fall. Most emerging markets fell, even as interest rates fell.
Transports led down big. The Baltic dry index fell. The dollar was unchanged.
Commodities were unchanged. Valuations continue to be quite expensive, market
breadth fell, and the sentiment is now bearish. Fear abated this week, as a possible
reality check from a FED Pivot looms.
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 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, 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. Looking for
significant underperformance in the Nifty going forward on challenging macros.
The critical levels to
watch for the week are 4130 (up) and 4105 (down) on the S&P 500 and 19150
(up) and 18950 (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 bust) You can check out last week’s report for a comparison.
Love your thoughts and feedback.
