|
Asset Class |
Weekly Level / Change |
Implications for S&P 500 |
Implications for Nifty* |
|
S&P
500 |
6238, -2.36% |
Bearish |
Bearish |
|
Nifty |
24565, -1.09% |
Neutral ** |
Bearish |
|
China
Shanghai Index |
3560, -0.94% |
Bearish |
Bearish |
|
Gold |
3414, 0.68% |
Bullish |
Bullish |
|
WTIC Crude |
67.33, 3.12% |
Bullish |
Bullish |
|
Copper |
4.46, -23.42% |
Bearish |
Bearish |
|
CRB Index |
295, -2.31% |
Bearish |
Bearish |
|
Baltic Dry
Index |
2018, -10.59% |
Bearish |
Bearish |
|
Euro |
1.1586, -1.45% |
Bearish |
Bearish |
|
Dollar/Yen |
147.38, -0.28% |
Neutral |
Neutral |
|
Dow
Transports |
15104, -7.70% |
Bearish |
Neutral |
|
Corporate
Bonds (ETF) |
109.63, 0.59% |
Bullish |
Bullish |
|
High-Yield
Bonds (ETF) |
96.35, -0.71% |
Bearish |
Bearish |
|
US 10-year
Bond Yield |
4.22%, -3.78% |
Bullish |
Bullish |
|
NYSE
Summation Index |
642, -24% |
Bearish |
Neutral |
|
US Vix |
20.38, 36.50% |
Bearish |
Bearish |
|
S&P
500 Skew |
156 |
Bearish |
Neutral |
|
CNN Fear
& Greed Index |
Neutral |
Neutral |
Neutral |
|
Nifty MMI
Index |
Extreme Fear |
Neutral |
Bullish |
|
20 DMA, S&P
500 |
6303, Below |
Bearish |
Neutral |
|
50 DMA, S&P
500 |
6130, Above |
Bullish |
Neutral |
|
200 DMA, S&P
500 |
5901, Above |
Bullish |
Neutral |
|
20 DMA,
Nifty |
25075, Below |
Neutral |
Bearish |
|
50 DMA,
Nifty |
25052, Below |
Neutral |
Bearish |
|
200 DMA,
Nifty |
24062, Above |
Neutral |
Bullish |
|
S&P
500 P/E |
29.74 |
Bearish |
Neutral |
|
Nifty P/E |
21.70 |
Neutral |
Bearish |
|
India Vix |
11.98, 6.21% |
Neutral |
Bearish |
|
Dollar/Rupee |
87.25, 0.86% |
Neutral |
Bearish |
|
Overall |
S&P
500 |
Nifty |
|
|
Bullish
Indications |
6 |
6 |
|
|
Bearish
Indications |
13 |
14 |
|
|
Outlook |
Bearish |
Bullish |
|
|
Observation |
The S&P and the Nifty fell last week.
Indicators are bearish for the week. Markets are
topping again. Watch those stops. |
||
|
On
the Horizon |
UK – BOE rate decision, India – RBI 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 was and the
Nifty fell last week. Indicators are bearish for the week. Markets
are topping. We are transitioning into a deflationary regime. The
sentiment is neutral. Carry trade liquidation is about to resume, and the
S&P will likely find resistance soon. The macro-environment was
rapidly deteriorating even before the recent tariff issue. The recent massive
breakdown in transports (subsequent non-conformation) is quite ominous. This,
combined with the oil's free fall, has profound recessionary implications. The
Nifty has corrected significantly from recent highs and will likely end its
outperformance soon.
The past week saw US
equity markets fall. Most emerging markets fell even as interest rates fell.
Transports fell. The Baltic Dry Index fell. The dollar rose. Commodities fell.
Valuations are expensive, market breadth fell, and the sentiment is neutral. Volatility
(S&P 500) rose.
A currency crisis should resume at any
moment and push risky assets to new lows. Deflation is in the air, and bonds
are telegraphing just that despite intermittent spikes in yields. 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 rally is a likely catalyst.
The S&P 500 is correcting from 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 as earnings growth falters. The Fed has aggressively tightened into a recession. Deflationary
busts often begin after major inflationary scares. The Dollar is at major lows,
while commodities and bond yields are flashing significant warning signs.
Global yield curves have inverted a
second time after the recent steepening,
reflecting the arrival of a significant economic slowdown. Following
the recent steepening of the yield curve after the first inversion, this second
inversion is complete, and currently, steepening, which 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 6250 (up) and 6225 (down) on the S&P 500 and 24650 (up) and 24500
(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 is a sell on every rise. Gold
increasingly looks like the asset class to own over the next decade (currently correcting).
Gold exploded almost eight times higher over the decade following the dot-com
bust in 2000. Imagine what would happen to gold as this AI bubble bursts. You
can check out last week’s
report for a comparison. I love your
thoughts and feedback.
