|
Indicator |
Weekly Level / Change |
Implication for S & P 500 |
Implication for Nifty* |
|
S & P 500 |
4167, -1.91% |
Bearish |
Bearish |
|
Nifty |
15683, -0.73% |
Neutral ** |
Bearish |
|
China Shanghai Index |
3525, -1.80% |
Bearish |
Bearish |
|
Gold |
1764, -6.13% |
Bearish |
Bearish |
|
WTIC Crude |
71.29, 0.54% |
Bullish |
Bullish |
|
Copper |
4.12,-9.19% |
Bearish |
Bearish |
|
Baltic Dry Index |
3218, 12.64% |
Bullish |
Bullish |
|
Euro |
1.1863, -2.01% |
Bearish |
Bearish |
|
Dollar/Yen |
110.24, 0.53% |
Bullish |
Bullish |
|
Dow Transports |
14623, -4.60% |
Bearish |
Bearish |
|
High Yield (Bond ETF) |
109.26, -0.21% |
Neutral |
Neutral |
|
US 10 year Bond Yield |
1.44%, -1.18% |
Bullish |
Bullish |
|
NYSE Summation Index |
769, -8.72% |
Bearish |
Neutral |
|
US Vix |
20.70, 32.27% |
Bearish |
Bearish |
|
Skew |
151 |
Bearish |
Bearish |
|
20 DMA, S & P 500 |
4212, Below |
Bearish |
Neutral |
|
50 DMA, S & P 500 |
4182, Below |
Bearish |
Neutral |
|
200 DMA, S & P 500 |
3799, Above |
Bullish |
Neutral |
|
20 DMA, Nifty |
15603, Above |
Neutral |
Bullish |
|
50 DMA, Nifty |
15063, Above |
Neutral |
Bullish |
|
200 DMA, Nifty |
13756, Above |
Neutral |
Bullish |
|
S & P 500 P/E |
44.26 |
Bearish |
Neutral |
|
Nifty P/E |
29.08 |
Neutral |
Bearish |
|
India Vix |
14.80, 4.93% |
Neutral |
Bearish |
|
Dollar/Rupee |
74.12, 1.20% |
Neutral |
Bearish |
|
Overall |
S & P 500 |
Nifty |
|
|
Bullish Indications |
5 |
7 |
|
|
Bearish Indications |
12 |
12 |
|
|
Outlook |
Bearish |
Bearish |
|
|
Observation |
The S and P and the Nifty fell last week. Indicators are bearish for
the week. The markets are beginning a correction. Watch those stops. |
||
|
On the Horizon |
US - GDP, China – PBOC rate decision, UK
– BOE rate decision |
||
|
*Nifty |
India’s Benchmark Stock Market Index |
||
|
Raw Data |
Courtesy Stock charts, investing.com, multpl.com, NSE |
||
|
**Neutral |
Changes less than 0.5% are considered neutral |
The S & P 500 and the Nifty fell last week.
Indicators are bearish for the week.
Earnings growth in the recent quarter has been very good but it is already in
the price. Typical late-cycle FED put stuff
is leading to a taper tantrum and an imminent top. Tail risk has skyrocketed with the Skew/Vix
ratio recently touching double digits. The market has begun an epic correction.
Deflationary busts often begin after inflationary scares (the market is calling
the Fed’s bluff) and long bonds are telegraphing just that. Transports, the Dollar, and the skew are
flashing major warning signs. The
epic crash signal is alive and well with retail, hedge funds, and speculators
all in, despite the recent melt-up and break out of the long-term broadening
top, suggesting a major top is imminent. The moment of reckoning is very
near. Technicals are about to track
fundamentals and turn bearish. The market is yet to price in one of the worst
earnings decline periods in stock market history. With extremely high
valuations, a crash is on the menu. Extremely low volatility suggests
complacency and downside ahead.
We rallied 46% right after the great depressions
(1930’s) first collapse and we have rallied over 90% in our most recent rally
of the lows in the last 12 month period. After extreme euphoria for the
indices, a highly probable selloff to the 3000 area is emerging on the S and P,
and 10000 should arrive on the Nifty in the next few months. The FED is
repeating the Japan experiment and the 3 lost decades in Japan (1989-2019) is set
to repeat across the globe. SPX 1500 and lower in a year and we stay there till
2030, scary? The markets are very close to an epic meltdown and the SPX is
headed way lower.
The markets are overvalued, overbought and out of
touch with economic realities. Long term, the epic meltdown is set to continue
resulting in a 5 year plus bear market with lot lower levels eventually as low as
800 on the S and P. QE forever from the FED is about to trigger the
deflationary collapse of the century as we make a major top in global equity
markets. The market is looking like the short of a lifetime with topping action
in the transports, other global indices, and commodities. High valuations
continue.
The recent global virus epidemic (black swan) has
dented global GDP significantly and will usher in a depression much faster than
most think. The trend is about to change from bullish to bearish and the
markets are about to get smashed by a rebounding dollar. Looking for
significant underperformance in the Nifty going forward on rapidly
deteriorating macros. A 5-year deflationary wave has started in key asset
classes like the Euro, stocks, and commodities amidst several bearish
divergences and overstretched valuations.
We are entering a multi-year great depression. The markets
are still trading well over 3 standard deviations above their long-term
averages from which corrections usually result. Tail risk has been very high of
late, as interest rates are plunging yet again reflecting a major
recession. The critical levels to watch for the week are 4180 (up) and 4155 (down) on the S & P 500 and 15750 (up) and 15600
(down) on the Nifty. A significant breach of the above levels could trigger
the next big move in the above markets.
High beta / P/E is about to get torched soon (despite the bullish
consensus emerging). Gold will
likely prove to be the best asset class
over the next 5 years. You can check out last week’s report for a comparison.
Love your thoughts and feedback.
