Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning August 17

Indicator	Weekly Level / Change	Implication for S & P 500	Implication for Nifty*
S & P 500	3373, 0.64%	Bullish	Bullish
Nifty	11178, -0.32%	Neutral **	Neutral
China Shanghai Index	3360, 0.18%	Neutral	Neutral
Gold	1954, -3.67%	Bearish	Bearish
WTIC Crude	42.23, 2.45%	Bullish	Bullish
Copper	2.86, 2.52%	Bullish	Bullish
Baltic Dry Index	1577, 5.06%	Bullish	Bullish
Euro	1.1843, 0.47%	Neutral	Neutral
Dollar/Yen	106.60, 0.63%	Bullish	Bullish
Dow Transports	10960, 3.62%	Bullish	Bullish
High Yield (Bond ETF)	104.38, -1.42%	Bearish	Bearish
US 10 year Bond Yield	0.71%, 25.33%	Bearish	Bearish
Nyse Summation Index	921, 15.51%	Bullish	Bullish
US Vix	22.05, -0.72%	Bullish	Bullish
Skew	137	Neutral	Neutral
20 DMA, S and P 500	3296, Above	Bullish	Neutral
50 DMA, S and P 500	3199, Above	Bullish	Neutral
200 DMA, S and P 500	3065, Above	Bullish	Neutral
20 DMA, Nifty	11171, Above	Neutral	Bullish
50 DMA, Nifty	10701, Above	Neutral	Bullish
200 DMA, Nifty	10842, Above	Neutral	Bullish
S & P 500 P/E	28.99	Bearish	Neutral
Nifty P/E	31.09	Neutral	Bearish
India Vix	21.67, -4.01%	Neutral	Bullish
Dollar/Rupee	74.90, -0.16%	Neutral	Neutral
Overall	S & P 500	Nifty
Bullish Indications	11	12
Bearish Indications	4	4
Outlook	Bullish	Bullish
Observation	The S and P was up and the Nifty fell last week. Indicators are bullish for the week. The markets have begun a great depression style collapse. Watch those stops.
On the Horizon	Euro Zone – CPI, UK CPI, Japan – GDP, China – PBOC 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 and P 500 rallied and the Nifty fell last week. Indicators are bullish for the coming week. The recent rally to the prior highs is on borrowed time as we experience one of the worst earnings decline period in stock market history with extremely high valuations amid a lot of bearish divergences. We rallied 46% right after the great depressions (1930’s) first collapse and we have rallied over 50% in our most recent rally of the lows in a similar 6 month period. After extreme euphoria for the indices a highly probable selloff to the 2700 area is emerging on the S and P, and 9000 should arrive on the Nifty in short order. The FED is repeating the Japan experiment and the lost 3 decades in Japan (1989-2019) is set to repeat across the globe. SPX 1500 and lower by year end and we stay there till 2050, scary? The markets are very close to an epic melt down and the SPX is headed way lower. The markets are overvalued, overbought and out of touch with economic realities. Long term, the epic meltdown is set to continue resulting in a 5 year plus bear market with lot lower levels maybe as low as 800 on the S and P. QE forever from the FED is about to trigger the deflationary collapse of the century and we have made a major top in global equity markets. The market is looking like the short of a life time with non-conformations from the transports, other global indices and commodities. High valuations continue. The breakdown in Crude and the Euro is a precursor to yet another massive drop in the S and P 500. The recent global virus epidemic (black swan) is likely to dent global GDP significantly and usher in a depression much faster than most think. The trend has changed from bullish to bearish and the markets are getting smashed by a strong dollar. Looking for significant under performance in the Nifty going forward on rapidly deteriorating macros. A 5 year deflationary wave has started in key asset classes like the Euro, stocks and commodities amidst a number of bearish divergences and over stretched valuations. We are entering a multi-year great depression. The markets are still trading well over 3 standard deviations above their long term averages from which corrections usually result. Tail risk has been very high off late as the yield curve inverts into a recession. The critical levels to watch for the week are 3385 (up) and 3360 (down) on the S & P 500 and 11250 (up) and 11100 (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 January 18

Indicator	Weekly Level / Change / Significance	Implication for S & P 500	Implication for Nifty*
S & P 500	1880, -2.17%	Bearish	Bearish
Nifty	7438, -2.15%	Neutral**	Bearish
China Shanghai Index	2901, -8.96%	Bearish	Bearish
Gold	1089, -1.40%	Bearish	Bearish
WTIC Crude	30.68, -6.69%	Bearish	Bearish
Copper	1.95, -3.30%	Bearish	Bearish
Baltic Dry Index	373, -13.05%	Bearish	Bearish
Euro	1.086, -0.57%	Bearish	Bearish
Dollar/Yen	117.04, -0.34%	Neutral	Neutral
Dow Transports	6689, -3.70%	Bearish	Bearish
High Yield (ETF)	32.73, -2.24%	Bearish	Bearish
US 10 year Bond Yield	2.03%, -4.55%	Bullish	Bullish
Nyse Summation Index	-535.44, -200.42%	Bearish	Neutral
US Vix	27.02, 0.04%	Neutral	Neutral
20 DMA, S and P 500	1996, Below	Bearish	Neutral
50 DMA, S and P 500	2041, Below	Bearish	Neutral
200 DMA, S and P 500	2054, Below	Bearish	Neutral
20 DMA, Nifty	7743, Below	Neutral	Bearish
50 DMA, Nifty	7789, Below	Neutral	Bearish
200 DMA, Nifty	8142, Below	Neutral	Bearish
India Vix	19.42, 9.09%	Neutral	Bearish
Dollar/Rupee	67.76, 1.30%	Bearish	Bearish
Overall	S & P 500	Nifty
Bullish Indications	1	1
Bearish Indications	15	17
Outlook	Bearish	Bearish
Observation	The Sand P 500 and the Nifty were down hard last week. Indicators are bearish but the market is becoming oversold. Looking for downside to continue after an oversold bounce.
On the Horizon	Canada – Rate decision, CPI, New Zealand – CPI, Euro zone – German ZEW survey, Rate decision U.K – CPI, U.S – CPI, China – GDP.
*Nifty	India’s Benchmark Stock Market Index
Raw Data	Courtesy Google finance, Stock charts, FXCM
**Neutral	Changes less than 0.5% are considered neutral

The US market and Nifty fell hard last week. Signals are bearish for the upcoming week. The markets are in crash mode and are likely to continue major breakdowns in 2016 after an oversold bounce. The critical levels to watch are 1900 (up) and 1860 (down) on the S & P and 7500 (up) and 7400 (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. You can also check out snapshots of the 

S and P 500 and Nifty Indices. Love your thoughts and feedback.