Stock Market Signals for the US and Indian Stock Markets for the week of May4

Indicator	Weekly Change / Significance	Implication for S & P 500	Implication for Nifty*
S & P 500	-0.40%	Bearish	Bearish
Nifty	-1.50%	Neutral	Bearish
Gold	-0.20%	Neutral	Neutral
WTIC Crude	3.20%	Bullish	Bearish
Copper	7.30%	Bullish	Bullish
Baltic Dry Index	-2.20%	Bearish	Bearish
Euro	3.00%	Bullish	Bullish
Yen	-1.10%	Bullish	Bullish
Dow Transports	-1.60%	Bearish	Bearish
Nyse Summation Index	-14.10%	Bearish	Bearish
US Vix	3.30%	Bearish	Bearish
20 DMA, S and P 500	Above	Bullish	Neutral
50 DMA, S and P 500	Above	Bullish	Neutral
200 DMA, S and P 500	Above	Bullish	Neutral
20 DMA, Nifty	Below	Neutral	Bearish
50 DMA, Nifty	Below	Neutral	Bearish
200 DMA, Nifty	Below	Neutral	Bearish
Overall	S & P 500	Nifty
Bullish Indications	7	3
Bearish Indications	5	10
Outlook	Marginally Bullish	Bearish
Observation	Summation index and Vix are flashing warning signs
On the Horizon	US Payrolls, Greece, UK elections
*Nifty	India’s Benchmark Stock Index
Raw Data	Courtesy yahoo finance, Stock charts

Has the Fed Ignited the Sell in May and Go Away Trade?

First and foremost most fed meetings are positive for the stock market. The fed usually gives the market what it wants and the markets keep going up and away. The last fed meeting stocks rallied after the fed successfully jaw boned the dollar into submission. Since then stocks have rallied and are encountering major resistance at the top end of their trading ranges.

The dollar has sold off close to 5% but has already contributed to  very weak quarterly earnings reports from several global powerhouses. With Greece lurking in the shadows any Euro strength may be short lived going forward and a resumption of broader dollar strength is likely.

This could spell trouble for commodities like gold and oil and other risk assets.



Eventually carry trade liquidation could spread to stock indices, with some recent bastions of strength like the German and Indian markets already showing some cracks.



Eventually markets will come around to the realization that QE forever polices globally have artificially propped up asset prices and their implosion is just around the corner in a painful and protracted process, with the "Sell in May and Go Away" trade just round the corner.

Strangle Strategy for a Volatile Nifty Post the Fed Announcement Tonight

Volatility in the market has been surging of late with the India Vix eclipsing the 20 level of late. I expect this to continue post the fed. A strangle can help capture market volatility on either side.

Nifty Current Spot: 8280

8300 April Call - 35
8200 April put -19
Break even = 54
Break even points -8354, 8146
You make money on either side of 8146, 8354
You loose money if market stays between the above two levels.