Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning August 20

Indicator	Weekly Level / Change	Implication for S & P 500	Implication for Nifty*
S & P 500	2850, 0.59%	Bullish	Neutral
Nifty	11471, 0.36%	Neutral **	Neutral
China Shanghai Index	2669, -4.52%	Bearish	Bearish
Gold	1184, -2.85%	Bearish	Bearish
WTIC Crude	65.21, -3.58%	Bearish	Bearish
Copper	2.63, -4.14%	Bearish	Bearish
Baltic Dry Index	1723, 1.89%	Bullish	Bullish
Euro	1.1444, 0.24%	Neutral	Neutral
Dollar/Yen	110.57, -0.26%	Neutral	Neutral
Dow Transports	11228, 1.24%	Bullish	Bullish
High Yield (ETF)	35.86, 0.14%	Neutral	Neutral
US 10 year Bond Yield	2.87%, 0.56%	Bearish	Bearish
Nyse Summation Index	427, -13.34%	Bearish	Neutral
US Vix	12.64, -3.95%	Bullish	Bullish
Skew	146	Bearish	Bearish
20 DMA, S and P 500	2833, Above	Bullish	Neutral
50 DMA, S and P 500	2793, Above	Bullish	Neutral
200 DMA, S and P 500	2715, Above	Bullish	Neutral
20 DMA, Nifty	11310, Above	Neutral	Bullish
50 DMA, Nifty	11015, Above	Neutral	Bullish
200 DMA, Nifty	10619, Above	Neutral	Bullish
India Vix	13.16, 2.41%	Neutral	Bearish
Dollar/Rupee	69.78, 1.01%	Neutral	Bearish
Overall	S & P 500	Nifty
Bullish Indications	7	6
Bearish Indications	7	8
Outlook	Neutral	Bearish
Observation	The S and P 500 was and the Nifty were up last week. Indicators are mixed. The markets are close to making secondary tops. Watch those stops.
On the Horizon	Euro Zone – German GDP, U.S – FED Speak, Canada – Retail sales
*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 were up last week. Indicators are mixed for the upcoming week. This rally is close to a major secondary top in key asset classes which is going to be followed by a massive selloff most likely a deflationary collapse. 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. Tail risk is also very high. The critical levels to watch for the week are 2860 (up) and 2840 (down) on the S & P 500 and 11550 (up) and 11400 (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.

Why a Massive Selloff in Risk Assets Could be Just a Few Days Away?

First market breadth is diverging with the New 52 week high low indicator not confirming the recent retest of highs in the S and P 500:



High beta segment of the market such as the Nasdaq is beginning to under perform the broader market much like in 2000:



The Skew Vix ratio as shown on stockcharts has spiked into double digits recently suggesting high tail risk, which is often a precursor to rising volatility and a risk off trade set up:

All this as we are in the middle of an emerging market currency crisis much like in 1998 unsupported by a tightening FED:

Emerging markets currencieshttps://t.co/iMzAOoBsZ4 pic.twitter.com/1f4DfSdl1e

— Chart of the day (@macrovaluechart) August 16, 2018

Quantitative Tightening Update (June 2018) – 5 Fed Charts https://t.co/IvFzZqBq2c via @seeitmarket

— Stéphane Collot (@stephanecollot) August 16, 2018

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning August 13

Indicator	Weekly Level / Change	Implication for S & P 500	Implication for Nifty*
S & P 500	2833, -0.25%	Neutral	Neutral
Nifty	11430, 0.60%	Neutral **	Bullish
China Shanghai Index	2795, 2.00%	Bullish	Bullish
Gold	1219, -0.34%	Neutral	Neutral
WTIC Crude	67.63, -1.26%	Bearish	Bearish
Copper	2.74, -0.76%	Bearish	Bearish
Baltic Dry Index	1691, -4.62%	Bearish	Bearish
Euro	1.1418, -1.36%	Bearish	Bearish
Dollar/Yen	110.83, -0.38%	Neutral	Neutral
Dow Transports	11090, -0.06%	Neutral	Neutral
High Yield (ETF)	35.81, -0.17%	Neutral	Neutral
US 10 year Bond Yield	2.86%, -3.25%	Bullish	Bullish
Nyse Summation Index	421, -8.82%	Bearish	Neutral
US Vix	13.16, 13.06%	Bearish	Bearish
Skew	149	Bearish	Bearish
20 DMA, S and P 500	2825, Above	Bullish	Neutral
50 DMA, S and P 500	2785, Above	Bullish	Neutral
200 DMA, S and P 500	2709, Above	Bullish	Neutral
20 DMA, Nifty	11222, Above	Neutral	Bullish
50 DMA, Nifty	10956, Above	Neutral	Bullish
200 DMA, Nifty	10598, Above	Neutral	Bullish
India Vix	12.85, 6.40%	Neutral	Bearish
Dollar/Rupee	69.08, 0.86%	Neutral	Bearish
Overall	S & P 500	Nifty
Bullish Indications	5	6
Bearish Indications	7	8
Outlook	Bearish	Bearish
Observation	The S and P 500 was down and the Nifty was up last week. Indicators are bearish. The markets are close to making secondary tops. Watch those stops.
On the Horizon	Australia – Employment data, Euro Zone – German GDP, CPI, U.K – Employment data, CPI, Retail sales, U.S – Retail sales, Canada – 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

The S and P 500 fell and the Nifty was up last week. Indicators are bearish for the upcoming week. This rally is close to a major secondary top in key asset classes which is going to be followed by a massive selloff. 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. Tail risk is also very high. The critical levels to watch for the week are 2845 (up) and 2820 (down) on the S & P 500 and 11500 (up) and 11300 (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.