|
Indicator |
Weekly Level / Change |
Implication for S & P 500 |
Implication for Nifty* |
|
S & P 500 |
4538, -1.22% |
Bearish |
Bearish |
|
Nifty |
17197, 1.00% |
Neutral ** |
Bullish |
|
China Shanghai Index |
3607, 1.22% |
Bullish |
Bullish |
|
Gold |
1784, -0.22% |
Neutral |
Neutral |
|
WTIC Crude |
66.27, -2.76% |
Bearish |
Bearish |
|
Copper |
4.27, -0.26% |
Neutral |
Neutral |
|
Baltic Dry Index |
3171, 14.60% |
Bullish |
Bullish |
|
Euro |
1.1316, -0.01% |
Neutral |
Neutral |
|
Dollar/Yen |
112.82, -0.43% |
Neutral |
Neutral |
|
Dow Transports |
15967, -1.53% |
Bearish |
Bearish |
|
High Yield (Bond ETF) |
107.28, 0.58% |
Bullish |
Bullish |
|
US 10 year Bond Yield |
1.36%, -11.44% |
Bullish |
Bullish |
|
NYSE Summation Index |
-167, -198% |
Bearish |
Neutral |
|
US Vix |
30.75, 7.44% |
Bearish |
Bearish |
|
Skew |
150 |
Bearish |
Bearish |
|
20 DMA, S & P 500 |
4653, Below |
Bearish |
Neutral |
|
50 DMA, S & P 500 |
4545, Below |
Bearish |
Neutral |
|
200 DMA, S & P 500 |
4306, Above |
Bullish |
Neutral |
|
20 DMA, Nifty |
17620, Below |
Neutral |
Bearish |
|
50 DMA, Nifty |
17807, Below |
Neutral |
Bearish |
|
200 DMA, Nifty |
16120, Above |
Neutral |
Bullish |
|
S & P 500 P/E |
28.59 |
Bearish |
Neutral |
|
Nifty P/E |
23.73 |
Neutral |
Bearish |
|
India Vix |
18.46, -11.28% |
Neutral |
Bullish |
|
Dollar/Rupee |
75.24, 0.27% |
Neutral |
Neutral |
|
Overall |
S & P 500 |
Nifty |
|
|
Bullish Indications |
5 |
7 |
|
|
Bearish Indications |
9 |
8 |
|
|
Outlook |
Bearish |
Bearish |
|
|
Observation |
The S and P fell and the Nifty rebounded
last week. Indicators are bearish for the week. The markets have begun a correction. Watch those stops. |
||
|
On the Horizon |
US – CPI, UK – GDP, Japan – GDP, India –
RBI 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 bounced 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 has run into resistance. 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 4550 (up) and 4525 (down) on the S
& P 500 and 17300 (up) and 17100 (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.
