|
Indicator |
Weekly
Level / Change |
Implication
for S
& P 500 |
Implication
for Nifty* |
|
S
& P 500 |
4433,
-0.57% |
Bearish |
Bearish |
|
Nifty |
17585,
1.24% |
Neutral
** |
Bullish |
|
China
Shanghai Index |
3614,
-2.41% |
Bearish |
Bearish |
|
Gold |
1754,
-2.13% |
Bearish |
Bearish |
|
WTIC
Crude |
71.82,
3.01% |
Bullish |
Bullish |
|
Copper |
4.24,
-4.78% |
Bearish |
Bearish |
|
Baltic
Dry Index |
4275,
10.64% |
Bullish |
Bullish |
|
Euro |
1.1724,
-0.76% |
Bearish |
Bearish |
|
Dollar/Yen |
110.00,
0.06% |
Neutral |
Neutral |
|
Dow
Transports |
14268,
-0.69% |
Bearish |
Bearish |
|
High
Yield (Bond ETF) |
109.95,
0.22% |
Neutral |
Neutral |
|
US
10 year Bond Yield |
1.36%,
1.63% |
Bearish |
Bearish |
|
NYSE
Summation Index |
16, -80.74% |
Bearish |
Neutral |
|
US
Vix |
20.81,
-0.67% |
Bullish |
Bullish |
|
Skew |
150 |
Bearish |
Bearish |
|
20
DMA, S & P 500 |
4491,
Below |
Bearish |
Neutral |
|
50
DMA, S & P 500 |
4436,
Below |
Bearish |
Neutral |
|
200
DMA, S & P 500 |
4103,
Above |
Bullish |
Neutral |
|
20
DMA, Nifty |
17109,
Above |
Neutral |
Bullish |
|
50
DMA, Nifty |
16457,
Above |
Neutral |
Bullish |
|
200
DMA, Nifty |
15149,
Above |
Neutral |
Bullish |
|
S
& P 500 P/E |
34.58 |
Bearish |
Neutral |
|
Nifty
P/E |
26.93 |
Neutral |
Bearish |
|
India
Vix |
15.23,
9.25% |
Neutral |
Bearish |
|
Dollar/Rupee |
73.65,
0.17% |
Neutral |
Neutral |
|
Overall |
S
& P 500 |
Nifty |
|
|
Bullish
Indications |
4 |
7 |
|
|
Bearish
Indications |
12 |
10 |
|
|
Outlook |
Bearish |
Bearish |
|
|
Observation |
The S and P fell and the Nifty was up last week. Indicators
are bearish for the week. The
markets are about to begin a correction. Watch those stops. |
||
|
On
the Horizon |
UK – BOE rate decision, US - FOMC
rate decision, China - PBOC 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 and P fell and
the Nifty was up last week. Indicators are bearish for the week. Deflation is in the
air. Markets have been making new highs amid loads of divergences and a big move beckons in a seasonally weak period for risk
assets. Earnings revisions have 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 is about to begin 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, market
breadth, commodities, and the skew are flashing major warning
signs. The epic correction signal is alive and well with retail, hedge
funds, and speculators all in, despite the recent melt-up, 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 100% 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 3900 area is emerging on the S and P, and 13000 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) are set to repeat across the globe. SPX 1800
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 that may be 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
about to plunge yet again reflecting a major recession. The critical levels
to watch for the week are 4445 (up) and 4420 (down) on the S & P
500 and 17650 (up) and 17500 (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). You can check out last week’s report for a comparison. Love your thoughts
and feedback.
