Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning February 26

Indicator	Weekly Level / Change	Implication for S & P 500	Implication for Nifty*
S & P 500	2747, 0.55%	Bullish	Bullish
Nifty	10491, 0.37%	Neutral **	Neutral
China Shanghai Index	3289, 2.81%	Bullish	Bullish
Gold	1330, -1.91%	Bearish	Bearish
WTIC Crude	63.55, 3.25%	Bullish	Bullish
Copper	3.21, -1.11%	Bearish	Bearish
Baltic Dry Index	1167, 7.16%	Bullish	Bullish
Euro	1.2295, -0.89%	Bearish	Bearish
Dollar/Yen	106.82, 0.56%	Bullish	Bullish
Dow Transports	10579, 0.73%	Bullish	Bullish
High Yield (ETF)	36.26, -0.17%	Neutral	Neutral
US 10 year Bond Yield	2.87%, -0.21%	Neutral	Neutral
Nyse Summation Index	-43, 48.88%	Bullish	Neutral
US Vix	16.49, -15.26%	Bullish	Bullish
Skew	139	Neutral	Neutral
20 DMA, S and P 500	2727, Above	Bullish	Neutral
50 DMA, S and P 500	2731, Above	Bullish	Neutral
200 DMA, S and P 500	2553, Above	Bullish	Neutral
20 DMA, Nifty	10639, Below	Neutral	Bearish
50 DMA, Nifty	10610, Below	Neutral	Bearish
200 DMA, Nifty	10098, Above	Neutral	Bullish
India Vix	14.20, -13.28%	Neutral	Bullish
Dollar/Rupee	64.84, 0.69%	Neutral	Bearish
Overall	S & P 500	Nifty
Bullish Indications	11	9
Bearish Indications	3	6
Outlook	Bullish	Bullish
Observation	The S and P 500 and the Nifty were up slightly last week. Indicators are bullish. The markets have made important tops. Time to watch those stops.
On the Horizon	China – PMI’s, Euro Zone – German employment data, German PMI, CPI, UK – PMI’s, U.S – Oil inventories, GDP, Powell speech, Durable goods, Consumer confidence, Home sales, ISM PMI, Employment data, Canada – 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

 Image from marketwatch.com

The S and P 500 and the Nifty moved up slightly last week. Indicators are bullish for the upcoming week. The recent rally has been supported by excessive fear which continues to be at elevated levels. Quantitative tightening by the FED is yet to be priced in fully. 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 below US market volatility so there is complacency and some catch up left on the down side. The critical levels to watch are 2760 (up) and 2735 (down) on the S & P and 10550 (up) and 10400 (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 February 19

Indicator	Weekly Level / Change	Implication for S & P 500	Implication for Nifty*
S & P 500	2732, 4.30%	Bullish	Bullish
Nifty	10452, -0.03%	Neutral **	Neutral
China Shanghai Index	3199, 2.21%	Bullish	Bullish
Gold	1356, 3.08%	Bullish	Bullish
WTIC Crude	61.55, 3.97%	Bullish	Bullish
Copper	3.25, 7.09%	Bullish	Bullish
Baltic Dry Index	1089, -1.54%	Bearish	Bearish
Euro	1.2405, 1.25%	Bullish	Bullish
Dollar/Yen	106.22, -2.35%	Bearish	Bearish
Dow Transports	10502, 3.61%	Bullish	Bullish
High Yield (ETF)	36.32, 1.79%	Bullish	Bullish
US 10 year Bond Yield	2.88%, 1.70%	Bearish	Bearish
Nyse Summation Index	-84, -53.79%	Bearish	Neutral
US Vix	19.46, -33.04%	Bullish	Bullish
Skew	132	Neutral	Neutral
20 DMA, S and P 500	2751, Below	Bearish	Neutral
50 DMA, S and P 500	2725, Above	Bullish	Neutral
200 DMA, S and P 500	2547, Above	Bullish	Neutral
20 DMA, Nifty	10781, Below	Neutral	Bearish
50 DMA, Nifty	10591, Below	Neutral	Bearish
200 DMA, Nifty	10071, Above	Neutral	Bullish
India Vix	16.38, -14.83%	Neutral	Bullish
Dollar/Rupee	64.39, 0.25%	Neutral	Neutral
Overall	S & P 500	Nifty
Bullish Indications	11	11
Bearish Indications	5	5
Outlook	Bullish	Bullish
Observation	The S and P 500 rebounded and the Nifty was unchanged last week. Indicators are bullish. The markets have made important tops. Time to watch those stops.
On the Horizon	Australia – RBA minutes, Euro Zone – German ZEW economic sentiment, German GDP, German PMI, CPI, ECB minutes, German IFO business climate index, UK – Carney speech, Employment data, GDP, U.S – Oil inventories, FOMC minutes, Home sales, Canada – Retail sales, CPI
*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

                                                         chart source: marketwatch.com

The S and P 500 rebounded and the Nifty was little changed last week. Indicators are bullish for the upcoming week. Quantitative tightening by the FED is yet to be priced in fully. 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 below US market volatility so there is complacency and some catch up left on the down side. The critical levels to watch are 2740 (up) and 2720 (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.

Bond Yield Spike Signaling Brand New Crisis

A very interesting chart from Marketwatch.com that shows every time bond yields tagged their long term down trend line a crisis of some proportion erupted we finally manage to pop above that line sowing the seeds for the next major crisis:

What is interesting is as Northmantrader points out the the S and  P 500 ten year yield ratio is showing signs of a major long term top suggesting a significant asset allocation out of stocks into bonds possibly on flight to quality fears when the next crisis commences: