Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning June 09

 

Asset Class	Weekly Level / Change	Implications for S&P 500	Implications for Nifty*
S&P 500	6000, 1.50%	Bullish	Bullish
Nifty	25003, 1.02%	Neutral **	Bullish
China Shanghai Index	3385, 1.13%	Bullish	Bullish
Gold	3347, 0.39%	Neutral	Neutral
WTIC Crude	64.58, 4.13%	Bullish	Bullish
Copper	4.85, 1.55%	Bullish	Bullish
CRB Index	301, 3.60%	Bullish	Bullish
Baltic Dry Index	1633, 15.16%	Bullish	Bullish
Euro	1.1395, 0.37%	Neutral	Neutral
Dollar/Yen	144.87, 0.74%	Bullish	Bullish
Dow Transports	14877, 1.30%	Bullish	Neutral
Corporate Bonds (ETF)	106.92, -0.79%	Bearish	Bearish
High-Yield Bonds (ETF)	95.62, -0.30%	Neutral	Neutral
US 10-year Bond Yield	4.51%, 2.45%	Bearish	Bearish
NYSE Summation Index	550, -2%	Bearish	Neutral
US Vix	16.77, -9.69%	Bullish	Neutral
S&P 500 Skew	139	Neutral	Neutral
CNN Fear & Greed Index	Greed	Bearish	Neutral
Nifty MMI Index	Greed	Neutral	Bearish
20 DMA, S&P 500	5900, Above	Bullish	Neutral
50 DMA, S&P 500	5630, Above	Bullish	Neutral
200 DMA, S&P 500	5796, Above	Bullish	Neutral
20 DMA, Nifty	24797, Above	Neutral	Bullish
50 DMA, Nifty	24137, Above	Neutral	Bullish
200 DMA, Nifty	24081, Above	Neutral	Bullish
S&P 500 P/E	28.63	Bearish	Neutral
Nifty P/E	22.47	Neutral	Bearish
India Vix	14.63, -9.00%	Neutral	Bullish
Dollar/Rupee	85.79, 0.31%	Neutral	Neutral
Overall	S&P 500	Nifty
Bullish Indications	12	12
Bearish Indications	5	4
Outlook	Bullish	Bullish
Observation	The S&P  and the Nifty rose last week. Indicators are bullish for the week. Markets are topping again. Watch those stops.
On the Horizon	UK – GDP, US – CPI, PPI, Japan – GDP
*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 and the Nifty rose last week. Indicators are bullish for the week. Markets are topping. We are transitioning into a deflationary regime. The sentiment is greedy. Carry trade liquidation is about to resume, and the S&P will likely find resistance near prior highs. The macro-environment was rapidly deteriorating even before the recent tariff issue. The recent massive breakdown in transports (recent rebound is quite shallow) is quite ominous. This, combined with oil's free fall (despite the recent rebound), 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 rise. Most emerging markets rose even as interest rates rose. Transports rose. The Baltic dry index rose. The dollar was unchanged. Commodities rose. Valuations are expensive, market breadth fell, and the sentiment is greedy. Volatility (S&P 500) fell.

A currency crisis should resume 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, 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 6015 (up) and 5985 (down) on the S&P 500 and 25100 (up) and 24900 (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.

 

 

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning June 02

 

Asset Class	Weekly Level / Change	Implications for S&P 500	Implications for Nifty*
S&P 500	5912, 1.88%	Bullish	Bullish
Nifty	24751, -0.41%	Neutral **	Neutral
China Shanghai Index	3348, -0.03%	Neutral	Neutral
Gold	3315, -1.63%	Bearish	Bearish
WTIC Crude	60.79, -1.84%	Bearish	Bearish
Copper	4.70, -3.08%	Bearish	Bearish
CRB Index	290, -2.10%	Bearish	Bearish
Baltic Dry Index	1418, 5.82%	Bullish	Bullish
Euro	1.1348, -0.24%	Neutral	Neutral
Dollar/Yen	144.06, 0.86%	Bullish	Bullish
Dow Transports	14686, 1.04%	Bullish	Neutral
Corporate Bonds (ETF)	107.77, 1.40%	Bullish	Bullish
High-Yield Bonds (ETF)	95.91, 0.83%	Bullish	Bullish
US 10-year Bond Yield	4.40%, -3.55%	Bullish	Bullish
NYSE Summation Index	562, -6%	Bearish	Neutral
US Vix	18.57, -16.69%	Bullish	Neutral
S&P 500 Skew	138	Neutral	Neutral
CNN Fear & Greed Index	Greed	Bearish	Neutral
Nifty MMI Index	Greed	Neutral	Bearish
20 DMA, S&P 500	5821, Above	Bullish	Neutral
50 DMA, S&P 500	5605, Above	Bullish	Neutral
200 DMA, S&P 500	5785, Above	Bullish	Neutral
20 DMA, Nifty	24693, Above	Neutral	Bullish
50 DMA, Nifty	23961, Above	Neutral	Bullish
200 DMA, Nifty	24069, Above	Neutral	Bullish
S&P 500 P/E	28.15	Bearish	Neutral
Nifty P/E	22.32	Neutral	Bearish
India Vix	16.08, -6.95%	Neutral	Bullish
Dollar/Rupee	85.53, 0.38%	Neutral	Neutral
Overall	S&P 500	Nifty
Bullish Indications	11	10
Bearish Indications	7	6
Outlook	Bullish	Bullish
Observation	The S&P rose and the Nifty fell last week. Indicators are bullish for the week. Markets are topping again. Watch those stops.
On the Horizon	Eurozone – CPI, ECB rate decision, US – Employment data
*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 rose and the Nifty fell last week. Indicators are bullish for the week. Markets are topping. We are transitioning into a deflationary regime. The sentiment is greedy. Carry trade liquidation will resume, and the S&P will likely find resistance near prior highs. The macro-environment was rapidly deteriorating even before the recent tariff issue. The recent massive breakdown in transports is quite ominous. This, combined with 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 rise. Most emerging markets fell even as interest rates fell. Transports rose. The Baltic dry index rose. The dollar was unchanged. Commodities fell. Valuations are expensive, market breadth fell, and the sentiment is greedy. Volatility (S&P 500) fell.

A currency crisis should resume 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, 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 (currently steepening) 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 5925 (up) and 5900 (down) on the S&P 500 and 24850 (up) and 24650 (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.