Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning February 05

Indicator	Weekly Level / Change	Implication for S & P 500	Implication for Nifty*
S & P 500	2762, -3.85%	Bearish	Bearish
Nifty	10761, -2.79%	Neutral **	Bearish
China Shanghai Index	3462, -2.70%	Bearish	Bearish
Gold	1337, -1.09%	Bearish	Bearish
WTIC Crude	65.45, -1.04%	Bearish	Bearish
Copper	3.19, -0.36%	Neutral	Neutral
Baltic Dry Index	1114, -8.46%	Bearish	Bearish
Euro	1.2458, 0.25%	Neutral	Neutral
Dollar/Yen	110.17, 1.41%	Bullish	Bullish
Dow Transports	10687, -3.94%	Bearish	Bearish
High Yield (ETF)	36.27, -1.33%	Bearish	Bearish
US 10 year Bond Yield	2.85%, 7.21%	Bearish	Bearish
Nyse Summation Index	384, -44.58%	Bearish	Neutral
US Vix	17.31, 56.23%	Bearish	Bearish
Skew	127	Neutral	Neutral
20 DMA, S and P 500	2802, Below	Bearish	Neutral
50 DMA, S and P 500	2715, Above	Bullish	Neutral
200 DMA, S and P 500	2532, Above	Bullish	Neutral
20 DMA, Nifty	10846, Below	Neutral	Bearish
50 DMA, Nifty	10546, Above	Neutral	Bullish
200 DMA, Nifty	10013, Above	Neutral	Bullish
India Vix	15.25, -12.89%	Neutral	Bullish
Dollar/Rupee	64.23, 0.93%	Neutral	Bearish
Overall	S & P 500	Nifty
Bullish Indications	3	4
Bearish Indications	11	12
Outlook	Bearish	Bearish
Observation	The S and P 500 and the Nifty fell sharply last week. Indicators are bearish. The markets are making important tops. Time to watch those stops.
On the Horizon	Australia – Retail sales, RBA rate decision, New Zealand – Employment data, RBNZ rate decision, China – PMI, UK – PMI data, BOE rate decision, Manufacturing production, U.S – ISM data, Oil inventories, Canada – PMI, Employment data,  India – Rate decision, Russia - Rate decision
*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 and the Nifty fell sharply last week. Signals are bearish for the upcoming week. Quantitative tightening by the FED is yet to be priced in fully 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. Divergences in high yield, transports and surging bond yields are flashing some warning signs. An interest rate shock can’t be ruled out. The critical levels to watch are 2775 (up) and 2750(down) on the S & P and 10850 (up) and 10700 (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.

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning January 29

Indicator	Weekly Level / Change	Implication for S & P 500	Implication for Nifty*
S & P 500	2873, 2.23%	Bullish	Bullish
Nifty	11070, 1.71%	Neutral **	Bullish
China Shanghai Index	3558, 2.01%	Bullish	Bullish
Gold	1352, 1.43%	Bullish	Bullish
WTIC Crude	66.14, 4.47%	Bullish	Bullish
Copper	3.20, 0.36%	Neutral	Neutral
Baltic Dry Index	1217, 6.85%	Bullish	Bullish
Euro	1.2427, 1.67%	Bullish	Bullish
Dollar/Yen	108.64, -1.97%	Bearish	Bearish
Dow Transports	11126, -1.59%	Bearish	Bearish
High Yield (ETF)	36.92, 0.27%	Neutral	Neutral
US 10 year Bond Yield	2.66%, 0.95%	Bearish	Bearish
Nyse Summation Index	692, 1.53%	Bullish	Neutral
US Vix	11.08, -1.69%	Bullish	Bullish
Skew	118	Neutral	Neutral
20 DMA, S and P 500	2772, Above	Bullish	Neutral
50 DMA, S and P 500	2691, Above	Bullish	Neutral
200 DMA, S and P 500	2521, Above	Bullish	Neutral
20 DMA, Nifty	10714, Above	Neutral	Bullish
50 DMA, Nifty	10475, Above	Neutral	Bullish
200 DMA, Nifty	9968, Above	Neutral	Bullish
India Vix	17.51, 25.21%	Neutral	Bearish
Dollar/Rupee	63.64, -0.33%	Neutral	Neutral
Overall	S & P 500	Nifty
Bullish Indications	11	11
Bearish Indications	3	4
Outlook	Bullish	Bullish
Observation	The S and P 500 and the Nifty made new highs last week. Indicators are bullish. The markets have gone parabolic. Time to watch those stops.
On the Horizon	Australia – CPI, China – PMI, Euro Zone – CPI, German employment data, UK – Carney speech, PMI, U.S – Consumer confidence, Oil inventories, Home sales, FOMC rate decision, Employment data, PMI, Canada – GDP, India – Union Budget
*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 and the Nifty made new highs 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. Divergences in high yield, transports and surging bond yields are flashing some warning signs. An interest rate shock can’t be ruled out. The critical levels to watch are 2885 (up) and 2860(down) on the S & P and 11150 (up) and 11000 (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. 

The Indian Market in 2008 Vs The Market Today

On the 10 year anniversary of one of the greatest market crashes in India's recent history here is an interesting comparison:

Year	Nifty P/E	USD/INR	GDP	NPA's (Trillion)
2008	>  25	< 45	> 9	< 1
2018	> 27	> 63	< 7	> 6

sources: Craytheon.com, RBI

It was a runaway rally in 2008 much like it is now. We had a market peak at a P/E ratio in excess of 25 as is the case now. The major difference being the Rupee has depreciated significantly now and our GDP is much lower. Also the banking system is saddled with almost 10 times more NPA's than was the case in 2008. So if you are tempted to think "Is this time different?" Think again!