Daily Forex Insight

Here are some insights from the currency strategists at dailyfx. They cover the fundamentals and technicals of key Forex pairs and other key markets along with some of the key economic news of the day. Today's commentary looks at the dollar and the S and P 500:

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning November 14

Indicator	Weekly Level / Change	Implication for S & P 500	Implication for Nifty*
S & P 500	2165, 3.80%	Bullish	Bullish
Nifty	8296, -1.63%	Neutral**	Bearish
China Shanghai Index	3196, 2.26%	Bullish	Bullish
Gold	1224, -6.15%	Bearish	Bearish
WTIC Crude	43.40, -1.50%	Bearish	Bearish
Copper	2.51, 10.77%	Bullish	Bullish
Baltic Dry Index	1045, 22.22%	Bullish	Bullish
Euro	1.089, -2.50%	Bearish	Bearish
Dollar/Yen	106.68, 3.49%	Bullish	Bullish
Dow Transports	8579, 6.24%	Bullish	Bullish
High Yield (ETF)	35.13, -1.93%	Bearish	Bearish
US 10 year Bond Yield	2.13%, 20.00%	Bearish	Bearish
Nyse Summation Index	-299, -7.71%	Bearish	Neutral
US Vix	24.17, -37.05%	Bullish	Bullish
20 DMA, S and P 500	2133, Below	Bullish	Neutral
50 DMA, S and P 500	2146, Below	Bullish	Neutral
200 DMA, S and P 500	2090, Above	Bullish	Neutral
20 DMA, Nifty	8573, Below	Neutral	Bearish
50 DMA, Nifty	8684, Below	Neutral	Bearish
200 DMA, Nifty	8116, Above	Neutral	Bullish
India Vix	17.36, 3.07%	Neutral	Bearish
Dollar/Rupee	67.54, 1.12%	Neutral	Bearish
Overall	S & P 500	Nifty
Bullish Indications	10	8
Bearish Indications	6	10
Outlook	Bulllish	Bearish
Observation	The S and P 500 bounced back and the Nifty fell hard last week. Indicators are mixed. The oversold bounce is largely over and downside is about to resume. Time to tighten those stops.
On the Horizon	Japan – GDP, Australia – Employment data, Canada - CPI, Euro Zone – German, Italian and Euro Zone GDP, German ZEW survey, UK-CPI, US – Retail sales, CPI
*Nifty	India’s Benchmark Stock Market Index
Raw Data	Courtesy Google finance, Stock charts, dailyfx.com
**Neutral	Changes less than 0.5% are considered neutral

The S and P 500 rallied and the Nifty fell hard last week. Signals are mixed for the upcoming week. Market momentum and breadth have been showing divergences for months now and sentiment indicators are finally catching up to the downside and a big breakdown will likely start soon. Bond yields have made a dramatic surge up and risky segments of the market like high yield and emerging markets are breaking down. The critical levels to watch are 2175 (up) and 2155 (down) on the S & P and 8400 (up) and 8200 (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.

Chart of the Week - Surging Bond Yields

The chart of the week is from StockCharts.com and shows the 10 year US bond yield:

It shows bond yields breaking out of long term resistance levels. Bond yields have surged over 50 basis points this month alone. Surging bond yields are triggers for major capitol outflows from risk assets and emerging markets. Recent instances of this were the taper tantrum at the end of QE3 and the 25 basis points hike by the FED last year both of which sent global markets down well over 15%. The FED is incidentally way behind the curve here and the market has already raised rates for the FED.