|
Asset Class |
Weekly Level / Change |
Implication for S & P 500 |
Implication for Nifty* |
|
S & P
500 |
6051, -0.64% |
Bearish |
Bearish |
|
Nifty |
24768, 0.37% |
Neutral ** |
Neutral |
|
China
Shanghai Index |
3392, -0.36% |
Neutral |
Neutral |
|
Gold |
2676, 0.61% |
Bullish |
Bullish |
|
WTIC Crude |
71.29, 6.09% |
Bullish |
Bullish |
|
Copper |
4.20, 0.01% |
Neutral |
Neutral |
|
CRB Index |
294, 2.66% |
Bullish |
Bullish |
|
Baltic Dry
Index |
1051, -9.94% |
Bearish |
Bearish |
|
Euro |
1.0502, -0.62% |
Bearish |
Bearish |
|
Dollar/Yen |
153.64, 2.41% |
Bullish |
Bullish |
|
Dow Transports |
16711, -1.00% |
Bearish |
Neutral |
|
Corporate
Bonds (ETF) |
108.72, -1.79% |
Bearish |
Bearish |
|
High Yield
Bonds (ETF) |
96.43, -0.70% |
Bearish |
Bearish |
|
US 10-year
Bond Yield |
4.40%, 6.10% |
Bearish |
Bearish |
|
NYSE
Summation Index |
221, -42% |
Bearish |
Neutral |
|
US Vix |
13.81, 8.14% |
Bearish |
Neutral |
|
S & P
500 Skew |
170 |
Bearish |
Neutral |
|
CNN Fear
& Greed Index |
Neutral |
Neutral |
Neutral |
|
Nifty MMI
Index |
Greed |
Neutral |
Bearish |
|
20 DMA, S
& P 500 |
6009, Above |
Bullish |
Neutral |
|
50 DMA, S
& P 500 |
5907, Above |
Bullish |
Neutral |
|
200 DMA, S
& P 500 |
5506,
Above |
Bullish |
Neutral |
|
20 DMA,
Nifty |
24214, Above |
Neutral |
Bullish |
|
50 DMA,
Nifty |
24442, Above |
Neutral |
Bullish |
|
200 DMA,
Nifty |
23769,
Above |
Neutral |
Bullish |
|
S & P
500 P/E |
30.98 |
Bearish |
Neutral |
|
Nifty P/E |
22.80 |
Neutral |
Bearish |
|
India Vix |
13.05, -7.69% |
Neutral |
Bullish |
|
Dollar/Rupee |
84.78, 0.13% |
Neutral |
Neutral |
|
Overall |
S
& P 500 |
Nifty |
|
|
Bullish
Indications |
7 |
8 |
|
|
Bearish
Indications |
11 |
8 |
|
|
Outlook |
Bearish |
Neutral |
|
|
Observation |
The
S&P fell, and the Nifty rose last week. Indicators are bearish for the
week. Markets
are topping. Watch those stops. |
||
|
On
the Horizon |
Japan – BOJ rate decision, US – GDP, FOMC rate decision Eurozone – CPI, UK- CPI, BOE rate decision |
||
|
*Nifty |
India’s
Benchmark Stock Market Index |
||
|
Raw Data |
Data courtesy
stockcharts.com, investing.com, multpl.com, nseindia.com, tickertape.in |
||
|
**Neutral |
Changes
less than 0.5% are considered neutral |
The S&P fell, and
the Nifty rose last week. Indicators are bearish for the
week. Markets are topping. We are transitioning from an
inflationary regime to a deflationary one. The sentiment is neutral,
and risk-reward is poor at these levels as divergences develop. Carry trade
liquidation may resume even as we enter a seasonally strong period. The
Nifty has corrected from recent highs and will likely underperform going
forward.
The past week saw US equity markets fall.
Most emerging markets were unchanged as interest rates rose. Transports fell.
The Baltic dry index fell. The dollar rose. Commodities rallied. Valuations are
expensive, market breadth fell, and the sentiment is neutral. Fear (S&P
500) abated.
After this rally, a currency crisis
should resume and push risky assets to new lows. Despite the recent
inflationary spike, deflation is in the air, and bonds are telegraphing just
that. It 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 significant support is
a likely catalyst.
The S&P 500 is near all-time 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 as earnings growth peaks. The Fed has aggressively tightened into a recession. Deflationary
busts often begin after major inflationary scares. After correcting
significantly, the market has made new highs, and more is left on the downside.
The Dollar, commodities, and bond yields are flashing significant warning
signs.
Global yield curves have steepened after
inverting significantly, reflecting a major economic slowdown. 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 6065 (up) and 6040 (down) on the S&P 500 and 24850 (up) and 24700
(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 again and likely be a sell on every
rise. Gold increasingly looks like the asset class to own over the next
decade. (Gold exploded almost eight times higher over the decade following the
dot-com bust in 2000. 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.
