Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning February 12

Indicator	Weekly Level / Change	Implication for S & P 500	Implication for Nifty*
S & P 500	2620, -5.16%	Bearish	Bearish
Nifty	10455, -2.84%	Neutral **	Bearish
China Shanghai Index	3130, -9.60%	Bearish	Bearish
Gold	1316, -1.62%	Bearish	Bearish
WTIC Crude	59.20, -9.55%	Bearish	Bearish
Copper	3.03, -4.83%	Bearish	Bearish
Baltic Dry Index	1106, -0.72%	Bearish	Bearish
Euro	1.2252, -1.66%	Bearish	Bearish
Dollar/Yen	108.78, -1.26%	Bearish	Bearish
Dow Transports	10137, -5.15%	Bearish	Bearish
High Yield (ETF)	35.68, -1.63%	Bearish	Bearish
US 10 year Bond Yield	2.83%, -0.88%	Bullish	Bullish
Nyse Summation Index	-55, -114.29%	Bearish	Neutral
US Vix	29.06, 67.88%	Bearish	Bearish
Skew	129	Neutral	Neutral
20 DMA, S and P 500	2775, Below	Bearish	Neutral
50 DMA, S and P 500	2719, Below	Bearish	Neutral
200 DMA, S and P 500	2539, Above	Bullish	Neutral
20 DMA, Nifty	10824, Below	Neutral	Bearish
50 DMA, Nifty	10562, Below	Neutral	Bearish
200 DMA, Nifty	10047, Above	Neutral	Bullish
India Vix	19.23, 26.10%	Neutral	Bearish
Dollar/Rupee	64.23, 0.00%	Neutral	Neutral
Overall	S & P 500	Nifty
Bullish Indications	2	2
Bearish Indications	14	15
Outlook	Bearish	Bearish
Observation	The S and P 500 and the Nifty fell sharply last week. Indicators are bearish. The markets have made important tops. Time to watch those stops.
On the Horizon	Japan – GDP, Australia – Employment data, Euro Zone – German GDP, CPI, UK – CPI, Retail sales, U.S – CPI, Retail sales, Oil inventories, PPI
*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 for the second week in a row. 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 warning signs. An interest rate shock can’t be ruled out. Indian market volatility is only 70% of US market volatility so there is complacency and some catch up left on the down side. The critical levels to watch are 2630 (up) and 2610(down) on the S & P and 10550 (up) and 10350 (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 Most Important Crowded Trade of All?

We have recently witnessed or are about to witness the implosion of a series of crowded trades namely long bitcoin, long Index ETF's and short volatility. The most important crowded trade of all is the dollar carry trade and this has been in vogue since the early 1980's. However the dollar appears to have broken out of its long term down trend line in the last 8 years post the great recession of 2008 though reluctantly so. When the real up move in the dollar occurs which is imminent look for massive carry trade liquidation and a rout in risky assets such as stocks, commodities and emerging market currencies:

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.