Things to Worry as a Bear

There's loads of things to worry about if you are a bear such as valuations, China, US yield curve flattening, economic woes in Europe, the recent collapse in freight rates etc. Here is an apt summary of these views from the pro's:

Things to Worry About as a Bear

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning March 12

Indicator	Weekly Level / Change	Implication for S & P 500	Implication for Nifty*
S & P 500	2787, 3.54%	Bullish	Bullish
Nifty	10227, -2.21%	Neutral **	Bearish
China Shanghai Index	3307, 1.62%	Bullish	Bullish
Gold	1324, 0.05%	Neutral	Neutral
WTIC Crude	62.04, 1.29%	Bullish	Bullish
Copper	3.14, 0.37%	Neutral	Neutral
Baltic Dry Index	1201, 0.42%	Neutral	Neutral
Euro	1.2307, -0.09%	Neutral	Neutral
Dollar/Yen	106.77, 0.98%	Bullish	Bullish
Dow Transports	10740, 3.94%	Bullish	Bullish
High Yield (ETF)	36.09, 0.25%	Neutral	Neutral
US 10 year Bond Yield	2.89%, 1.30%	Bearish	Bearish
Nyse Summation Index	164, 1023.97%	Bullish	Neutral
US Vix	14.64, -25.27%	Bullish	Bearish
Skew	128	Neutral	Neutral
20 DMA, S and P 500	2714, Above	Bullish	Neutral
50 DMA, S and P 500	2742, Above	Bullish	Neutral
200 DMA, S and P 500	2571, Above	Bullish	Neutral
20 DMA, Nifty	10420, Below	Neutral	Bearish
50 DMA, Nifty	10606, Below	Neutral	Bearish
200 DMA, Nifty	10140, Above	Neutral	Bullish
India Vix	14.52, 3.22%	Neutral	Bearish
Dollar/Rupee	64.93, -0.39%	Neutral	Neutral
Overall	S & P 500	Nifty
Bullish Indications	10	6
Bearish Indications	1	6
Outlook	Bullish	Neutral
Observation	The S and P 500 rallied and the Nifty fell last week. Indicators are mixed. The markets have made important tops. Time to watch those stops.
On the Horizon	New Zealand – GDP, China – Industrial production, Euro Zone – German ZEW economic sentiment, CPI, Switzerland – SNB rate decision, U.S – CPI, Retail sales, Oil inventories, Canada – Poloz speech
*Nifty	India’s Benchmark Stock Market Index
Raw Data	Courtesy Google finance, Stock charts, investing.com
**Neutral	Changes less than 0.5% are considered neutral

Image from marketwatch.com

The S and P 500 rallied and the Nifty sharply under performed last week. Indicators are mixed for the upcoming week. Quantitative tightening by the FED is yet to be priced in fully. The markets are still trading well over 3 standard deviations above their long term averages from which corrections usually result. Divergences in high yield and surging bond yields are flashing warning signs. An interest rate shock can’t be ruled out. Indian market volatility is still below US market volatility so there is complacency and some catch up left on the down side. The critical levels to watch are 2800 (up) and 2775 (down) on the S & P and 10300 (up) and 10150 (down) on the Nifty. A significant breach of the above levels could trigger the next big move in the above markets. You can check out last week’s report for a comparison. Love your thoughts and feedback.

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning March 05

Indicator	Weekly Level / Change	Implication for S & P 500	Implication for Nifty*
S & P 500	2691, -2.04%	Bearish	Bearish
Nifty	10458, -0.31%	Neutral **	Neutral
China Shanghai Index	3255, -1.05%	Bearish	Bearish
Gold	1323, -0.52%	Bearish	Bearish
WTIC Crude	61.25, -3.62%	Bearish	Bearish
Copper	3.12, -2.74%	Bearish	Bearish
Baltic Dry Index	1167, 7.16%	Bullish	Bullish
Euro	1.2317, 0.18%	Neutral	Neutral
Dollar/Yen	105.73, -1.01%	Bearish	Bearish
Dow Transports	10333, -2.32%	Bearish	Bearish
High Yield (ETF)	36.00, -0.27%	Neutral	Neutral
US 10 year Bond Yield	2.86%, -0.49%	Neutral	Neutral
Nyse Summation Index	-18, 58.93%	Bullish	Neutral
US Vix	19.59, 18.80%	Bearish	Bearish
Skew	128	Neutral	Neutral
20 DMA, S and P 500	2697, Below	Bearish	Neutral
50 DMA, S and P 500	2736, Below	Bearish	Neutral
200 DMA, S and P 500	2562, Above	Bullish	Neutral
20 DMA, Nifty	10529, Below	Neutral	Bearish
50 DMA, Nifty	10629, Below	Neutral	Bearish
200 DMA, Nifty	10120, Above	Neutral	Bullish
India Vix	14.07, -0.92%	Neutral	Bullish
Dollar/Rupee	65.19, 0.54%	Neutral	Bearish
Overall	S & P 500	Nifty
Bullish Indications	3	3
Bearish Indications	10	11
Outlook	Bearish	Bearish
Observation	The S and P 500 and the Nifty fell last week. Indicators are bearish. The markets have made important tops. Time to watch those stops.
On the Horizon	Australia – Retail sales, GDP, RBA rate decision, Japan – GDP, BOJ Rate decision, Euro Zone – Italian elections, ECB rate decision, UK – Services PMI, GDP,  U.S – Oil inventories, ISM PMI, Employment data, Canada – PMI, BOC rate decision, Poloz speech, Employment data
*Nifty	India’s Benchmark Stock Market Index
Raw Data	Courtesy Google finance, Stock charts, investing.com
**Neutral	Changes less than 0.5% are considered neutral

Image from marketwatch.com

The S and P 500 and the Nifty were down last week. Indicators are bearish for the upcoming week. Quantitative tightening by the FED is yet to be priced in fully. The markets are still trading well over 3 standard deviations above their long term averages from which corrections usually result. Divergences in high yield, transports and surging bond yields are flashing warning signs. An interest rate shock can’t be ruled out. Indian market volatility is below US market volatility so there is complacency and some catch up left on the down side. The critical levels to watch are 2700 (up) and 2680 (down) on the S & P and 10550 (up) and 10400 (down) on the Nifty. A significant breach of the above levels could trigger the next big move in the above markets. You can check out last week’s report for a comparison. Love your thoughts and feedback.