|
Indicator |
Weekly Level / Change |
Implication for S & P 500 |
Implication for Nifty* |
|
S & P 500 |
4349, -1.58% |
Bearish |
Bearish |
|
Nifty |
17276, -0.57% |
Neutral ** |
Bearish |
|
China Shanghai Index |
3491, 0.80% |
Bullish |
Bullish |
|
Gold |
1901, 3.19% |
Bullish |
Bullish |
|
WTIC Crude |
91.80, -1.40% |
Bearish |
Bearish |
|
Copper |
4.52, 0.96% |
Bullish |
Bullish |
|
Baltic Dry Index |
1964, -0.66% |
Bearish |
Bearish |
|
Euro |
1.1323, -0.23% |
Neutral |
Neutral |
|
Dollar/Yen |
115.00, -0.36% |
Neutral |
Neutral |
|
Dow Transports |
14971, -0.19% |
Neutral |
Neutral |
|
Corporate Bonds (ETF) |
123.68, -0.93% |
Bearish |
Bearish |
|
High Yield Bonds (ETF) |
103.38, 0.24% |
Neutral |
Neutral |
|
US 10-year Bond Yield |
1.93%, 0.46% |
Neutral |
Neutral |
|
NYSE Summation Index |
-609, -5.9% |
Bearish |
Neutral |
|
US Vix |
27.75, 1.43% |
Bearish |
Bearish |
|
Skew |
128 |
Neutral |
Neutral |
|
20 DMA, S & P 500 |
4455, Below |
Bearish |
Neutral |
|
50 DMA, S & P 500 |
4588, Below |
Bearish |
Neutral |
|
200 DMA, S & P 500 |
4458, Below |
Bearish |
Neutral |
|
20 DMA, Nifty |
17353, Below |
Neutral |
Bearish |
|
50 DMA, Nifty |
17461, Below |
Neutral |
Bearish |
|
200 DMA, Nifty |
16835, Above |
Neutral |
Bullish |
|
S & P 500 P/E |
24.80 |
Bearish |
Neutral |
|
Nifty P/E |
22.21 |
Neutral |
Bearish |
|
India Vix |
22.17, 18.66% |
Neutral |
Bearish |
|
Dollar/Rupee |
74.68, -0.84% |
Neutral |
Bullish |
|
Overall |
S & P 500 |
Nifty |
|
|
Bullish Indications |
3 |
5 |
|
|
Bearish Indications |
10 |
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 |
US - GDP, Eurozone –CPI, German GDP, 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 and the Nifty fell last week. Indicators are bearish for the week. Deflation is in the
air despite the recent inflationary spike. Feels like a 2000 style recession
trade has begun. The recent rebound has run into resistance. (My views don’t
matter, kindly pay attention to the levels). The S&P 500 closed below
the 200 DMA for 6 consecutive sessions, after spending a very long time above
it. This spells trouble ahead and opens up significant downside ahead,
which should at least test the recent lows near 4215 on the S &P. Markets
have been making new highs amid loads of divergences and risky assets are breaking to the
downside. Earnings revisions have been average, but any significant upward
revisions appear unlikely. Typical late-cycle FED put stuff has
led to a taper tantrum following the recent taper announcement
from the FED and a likely 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 may be in. 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 2-year period. After extreme euphoria for the indices, a highly
probable selloff to the 4300 area is emerging on the S and P, and 15000 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 strong 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 4360 (up) and 4335 (down) on the S
& P 500 and 17350 (up) and 17200 (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 getting torched as
expected. 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.
