|
Indicator |
Weekly Level / Change |
Implication for S & P 500 |
Implication for Nifty* |
|
S & P 500 |
4398, -5.68% |
Bearish |
Bearish |
|
Nifty |
17617, -3.50% |
Neutral ** |
Bearish |
|
China Shanghai Index |
3523, 0.04% |
Neutral |
Neutral |
|
Gold |
1836, 1.11% |
Bullish |
Bullish |
|
WTIC Crude |
84.84, 1.20% |
Bullish |
Bullish |
|
Copper |
4.52, 1.73% |
Bullish |
Bullish |
|
Baltic Dry Index |
1415, -19.78% |
Bearish |
Bearish |
|
Euro |
1.1344, -0.61% |
Bearish |
Bearish |
|
Dollar/Yen |
113.69, -0.45% |
Neutral |
Neutral |
|
Dow Transports |
15247, -4.13% |
Bearish |
Bearish |
|
Corporate Bonds (ETF) |
128.90, -0.20% |
Neutral |
Neutral |
|
High Yield Bonds (ETF) |
106.59, -0.86% |
Bearish |
Bearish |
|
US 10-year Bond Yield |
1.77%, -1.28% |
Bullish |
Bullish |
|
NYSE Summation Index |
-169, -358% |
Bearish |
Neutral |
|
US Vix |
28.85, 50.34% |
Bearish |
Bearish |
|
Skew |
136 |
Neutral |
Neutral |
|
20 DMA, S & P 500 |
4686, Below |
Bearish |
Neutral |
|
50 DMA, S & P 500 |
4666, Below |
Bearish |
Neutral |
|
200 DMA, S & P 500 |
4429, Below |
Bearish |
Neutral |
|
20 DMA, Nifty |
17776, Below |
Neutral |
Bearish |
|
50 DMA, Nifty |
17505, Above |
Neutral |
Bullish |
|
200 DMA, Nifty |
16575, Above |
Neutral |
Bullish |
|
S & P 500 P/E |
25.08 |
Bearish |
Neutral |
|
Nifty P/E |
24.29 |
Neutral |
Bearish |
|
India Vix |
18.89, 14.09% |
Neutral |
Bearish |
|
Dollar/Rupee |
74.42, 0.36% |
Neutral |
Neutral |
|
Overall |
S & P 500 |
Nifty |
|
|
Bullish Indications |
4 |
6 |
|
|
Bearish Indications |
11 |
10 |
|
|
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 GDP, US - FOMC rate decision, GDP |
||
|
*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 may
run into resistance. (My views don’t matter, kindly pay attention to the levels).
My preference here is for a flush, followed by a bounce into FED day,
followed by another flush before a meaningful bottom emerges. 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.
The transports, the Dollar, market breadth, corporate bonds, and high
yield bonds, 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 tracking fundamentals and have
turned 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 4410 (up) and 4385 (down) on the S
& P 500 and 17700 (up) and 17550 (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 earlier on). 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.
