FED Balance Sheet Vs Emerging Market Volatility Vs Stock Market Capitalization to GDP

The assets on the FED balance sheet stands at well over 4.4 trillion dollars, this has coincided with record low emerging market volatility and highly inflated levels of stock market capitalization to GDP globally. With the FED beginning a slow tapering process, some sort of mean reversal is on the cards which could result in an uptick in emerging market volatility and a pull back of some sort in global stock market indices:

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning December 18

Indicator	Weekly Level / Change	Implication for S & P 500	Implication for Nifty*
S & P 500	2676, 0.92%	Bullish	Bullish
Nifty	10333, 0.66%	Neutral **	Bullish
China Shanghai Index	3266, -0.73%	Bearish	Bearish
Gold	1258, 0.73%	Bullish	Bullish
WTIC Crude	57.33, -0.05%	Neutral	Neutral
Copper	3.13, 5.24%	Bullish	Bullish
Baltic Dry Index	1668, -0.66%	Bearish	Bearish
Euro	1.1750, -0.24%	Neutral	Neutral
Dollar/Yen	112.60, -0.76%	Bearish	Bearish
Dow Transports	10393, -0.09%	Neutral	Neutral
High Yield (ETF)	36.70, -0.16%	Neutral	Neutral
US 10 year Bond Yield	2.35%, -1.17%	Bullish	Bullish
Nyse Summation Index	484, -0.79%	Neutral	Bearish
US Vix	9.42, -1.67%	Bullish	Bullish
Skew	136	Neutral	Neutral
20 DMA, S and P 500	2630, Above	Bullish	Neutral
50 DMA, S and P 500	2594, Above	Bullish	Neutral
200 DMA, S and P 500	2468, Above	Bullish	Neutral
20 DMA, Nifty	10263, Above	Neutral	Bullish
50 DMA, Nifty	10249, Above	Neutral	Bullish
200 DMA, Nifty	9748, Above	Neutral	Bullish
India Vix	14.94, 9.27%	Neutral	Bearish
Dollar/Rupee	64.05, -0.68%	Neutral	Bullish
Overall	S & P 500	Nifty
Bullish Indications	8	10
Bearish Indications	3	5
Outlook	Bullish	Bullish
Observation	The S and P 500 made new highs and the Nifty rallied last week. Indicators are bullish. The market is topping. Time to watch those stops.
On the Horizon	Australia – RBA minutes, New Zealand – GDP, Japan – Rate decision, China – Industrial production, Euro Zone – CPI, German IFO Index, UK – GDP, U.S – Building permits, Home sales, Oil inventories, GDP, Durable goods,  Canada – Employment data, Retail sales, CPI, GDP
*Nifty	India’s Benchmark Stock Market Index
Raw Data	Courtesy Google finance, Stock charts, investing.com
**Neutral	Changes less than 0.5% are considered neutral

The S and P 500 made a new high and the Nifty moved up last week. Signals are bullish for the upcoming week. Quantitative tightening by the FED is yet to be priced in and sentiment indicators are back in complacency mode. The markets are still trading well over 3 standard deviations above their long term averages from which corrections usually result. The critical levels to watch are 2685 (up) and 2665(down) on the S & P and 10400 (up) and 10250 (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. 

Bitcoin 2017 Vs Home Builders 2008 Vs Nasdaq 2000

Most periods of excessive booms end with speculative busts. The dotcom bust of 2000 produced a recession so did the housing bust of 2008. Today's poster child seems to be bitcoin. Just as the internet was here to stay back in 2000 so is block chain technology today. However crypto currencies are trading at levels suggesting they could become reserve currencies of the world replacing the dollar and that implies a reset on short order. It's never different and always the same: