|
Indicator |
Weekly Level / Change |
Implication for S & P 500 |
Implication for Nifty* |
|
S & P 500 |
4677, -1.87% |
Bearish |
Bearish |
|
Nifty |
17813, 2.64% |
Neutral ** |
Bullish |
|
China Shanghai Index |
3580, -1.65% |
Bearish |
Bearish |
|
Gold |
1796, -1.77% |
Bearish |
Bearish |
|
WTIC Crude |
78.89, 4.89% |
Bullish |
Bullish |
|
Copper |
4.40, -1.34% |
Bearish |
Bearish |
|
Baltic Dry Index |
2289, 3.25% |
Bullish |
Bullish |
|
Euro |
1.1361, -0.06% |
Neutral |
Neutral |
|
Dollar/Yen |
115.54, 0.40% |
Neutral |
Neutral |
|
Dow Transports |
16269, -1.27% |
Bearish |
Bearish |
|
Corporate Bonds (ETF) |
129.72, -2.11% |
Bearish |
Bearish |
|
High Yield Bonds (ETF) |
107.20, -1.26% |
Bearish |
Bearish |
|
US 10-year Bond Yield |
1.77%, 16.75% |
Bearish |
Bearish |
|
NYSE Summation Index |
20, 120% |
Bullish |
Neutral |
|
US Vix |
18.76, 8.94% |
Bearish |
Bearish |
|
Skew |
139 |
Neutral |
Neutral |
|
20 DMA, S & P 500 |
4712, Below |
Bearish |
Neutral |
|
50 DMA, S & P 500 |
4675, Above |
Bullish |
Neutral |
|
200 DMA, S & P 500 |
4403, Above |
Bullish |
Neutral |
|
20 DMA, Nifty |
17483, Above |
Neutral |
Bullish |
|
50 DMA, Nifty |
17279, Above |
Neutral |
Bullish |
|
200 DMA, Nifty |
16405, Above |
Neutral |
Bullish |
|
S & P 500 P/E |
29.46 |
Bearish |
Neutral |
|
Nifty P/E |
24.75 |
Neutral |
Bearish |
|
India Vix |
17.60, 8.51% |
Neutral |
Bearish |
|
Dollar/Rupee |
74.22, -0.35% |
Neutral |
Neutral |
|
Overall |
S & P 500 |
Nifty |
|
|
Bullish Indications |
5 |
6 |
|
|
Bearish Indications |
11 |
11 |
|
|
Outlook |
Bearish |
Bearish |
|
|
Observation |
The S and P fell and the Nifty rallied
last week. Indicators are bearish for the week. The markets have begun a correction. Watch those stops. |
||
|
On the Horizon |
US – CPI, PPI |
||
|
*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 rallied 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 may run into resistance. (My views don’t matter, kindly pay attention
to the levels). Markets have been making new highs amid loads of divergences and a big move beckons for risk assets to
the downside. 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 the transports have improved, the Dollar, market breadth, corporate
bonds, high yield bonds, and 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 120% 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 4300 area is emerging on the S and P, and 14000 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 4690 (up) and 4665 (down) on the S
& P 500 and 17900 (up) and 17750 (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. Happy New Year!
