|
Indicator |
Weekly
Level / Change |
Implication
for S
& P 500 |
Implication
for Nifty* |
|
S
& P 500 |
4595,
-2.20% |
Bearish |
Bearish |
|
Nifty |
17027,
-4.16% |
Neutral
** |
Bearish |
|
China
Shanghai Index |
3564,
0.10% |
Neutral |
Neutral |
|
Gold |
1791,
-3.25% |
Bearish |
Bearish |
|
WTIC
Crude |
68.17,
-10.42% |
Bearish |
Bearish |
|
Copper |
4.28,
-2.92% |
Bearish |
Bearish |
|
Baltic
Dry Index |
2667,
4.51% |
Bullish |
Bullish |
|
Euro |
1.1319,
0.27% |
Neutral |
Neutral |
|
Dollar/Yen |
113.31,
-0.59% |
Bearish |
Bearish |
|
Dow
Transports |
16216,
-1.83% |
Bearish |
Bearish |
|
High
Yield (Bond ETF) |
106.66,
-1.31% |
Bearish |
Bearish |
|
US
10 year Bond Yield |
1.48%,
-4.89% |
Bullish |
Bullish |
|
NYSE
Summation Index |
170,
-55% |
Bearish |
Neutral |
|
US
Vix |
28.62,
59.80% |
Bearish |
Bearish |
|
Skew |
148 |
Bearish |
Bearish |
|
20
DMA, S & P 500 |
4670,
Below |
Bearish |
Neutral |
|
50
DMA, S & P 500 |
4528,
Above |
Bullish |
Neutral |
|
200
DMA, S & P 500 |
4290,
Above |
Bullish |
Neutral |
|
20
DMA, Nifty |
17808,
Below |
Neutral |
Bearish |
|
50
DMA, Nifty |
17841,
Below |
Neutral |
Bearish |
|
200
DMA, Nifty |
16065,
Above |
Neutral |
Bullish |
|
S
& P 500 P/E |
28.94 |
Bearish |
Neutral |
|
Nifty
P/E |
23.49 |
Neutral |
Bearish |
|
India
Vix |
20.80,
40.01% |
Neutral |
Bearish |
|
Dollar/Rupee |
75.07,
0.98% |
Neutral |
Bearish |
|
Overall |
S
& P 500 |
Nifty |
|
|
Bullish
Indications |
4 |
3 |
|
|
Bearish
Indications |
12 |
15 |
|
|
Outlook |
Bearish |
Bearish |
|
|
Observation |
The S and P and the Nifty fell last week. Indicators are bearish
for the week. The
markets have begun a correction. Watch those stops. |
||
|
On
the Horizon |
Eurozone
– German employment
data, CPI, US – Employment data |
||
|
*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 and the Nifty
fell last week. Indicators are bearish for the week. Deflation is in the
air. Feels like a 2000 style recession trade has begun. The recent rebound might
run into resistance soon. Markets have been making new highs amid loads of divergences and a big move beckons for risk assets. Earnings revisions have been
very good, entering a bullish seasonal period, but it is already in the price.
Typical late-cycle FED put stuff will likely lead to a taper
tantrum following the recent taper announcement from the Fed, 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.
While
market breadth and transports have improved, the Dollar, high yield, interest
rates, and the skew are
still 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 4605 (up) and 4585 (down) on the S & P
500 and 17100 (up) and 16950 (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 is increasingly
looking like the asset class to own in the upcoming decade. You can check
out last week’s report for a comparison. Love your thoughts
and feedback.
