Stock Market Signals for the US and Indian Stock Markets for the Upcoming Week beginning May11

Indicator	Weekly Level / Change / Significance	Implication for S & P 500	Implication for Nifty*
S & P 500	2116, 0.40%	Neutral**	Neutral
Nifty	8192, 0.10%	Neutral	Neutral
China Shanghai Index	4206, -5.3%	Bearish	Bearish
Gold	1187, 0.90%	Bullish	Bullish
WTIC Crude	59.5, 0.40%	Neutral	Neutral
Copper	2.91, -0.90%	Bearish	Bearish
Baltic Dry Index	574, -2.20%	Bearish	Bearish
Euro	1.120, 0.10%	Neutral	Neutral
Dollar/Yen	119.76, -0.3%	Neutral	Neutral
Dow Transports	8767, 0.30%	Neutral	Neutral
Nyse Summation Index	306, -37%	Bearish	Bearish
US Vix	12.86, 1.30%	Bearish	Bearish
20 DMA, S and P 500	2102, Above	Bullish	Neutral
50 DMA, S and P 500	2089, Above	Bullish	Neutral
200 DMA, S and P 500	2030, Above	Bullish	Neutral
20 DMA, Nifty	8417, Below	Neutral	Bearish
50 DMA, Nifty	8574, Below	Neutral	Bearish
200 DMA, Nifty	8271, Below	Neutral	Bearish
India Vix	19.11, 11%	Neutral	Bearish
Dollar/Rupee	63.75, 0.1%	Neutral	Neutral
Overall	S & P 500	Nifty
Bullish Indications	4	1
Bearish Indications	5	9
Outlook	Marginally Bearish	Bearish
Observation	The Sand P 500 is at the top of its trading range while the Nifty is at the lower end of its range. The summation index is still flashing warning signs.
On the Horizon	Greece, Italy and German GDP, US PPI and retail sales
*Nifty	India’s Benchmark Stock Index
Raw Data	Courtesy Google finance, Stock charts
**Neutral	Changes less than 0.5% are considered neutral

I have added three new indicators this week, the Chinese stock market index, the India Vix and the Dollar/Rupee rate.

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.