|
Indicator |
Weekly Level / Change |
Implication for S & P 500 |
Implication for Nifty* |
|
S & P 500 |
4546, 0.06% |
Neutral |
Neutral |
|
Nifty |
17671, 3.02% |
Neutral ** |
Bullish |
|
China Shanghai Index |
3283, 2.19% |
Bullish |
Bullish |
|
Gold |
1924, -1.56% |
Bearish |
Bearish |
|
WTIC Crude |
99.38, -12.75% |
Bearish |
Bearish |
|
Copper |
4.71, 0.19% |
Neutral |
Neutral |
|
Baltic Dry Index |
2357, -7.35% |
Bearish |
Bearish |
|
Euro |
1.1041, 0.55% |
Bullish |
Bullish |
|
Dollar/Yen |
122.54, 0.39% |
Neutral |
Neutral |
|
Dow Transports |
15511, -5.34% |
Bearish |
Bearish |
|
Corporate Bonds (ETF) |
119.27, 1.53% |
Bullish |
Bullish |
|
High Yield Bonds (ETF) |
102.15, 0.81% |
Bullish |
Bullish |
|
US 10-year Bond Yield |
2.39%, -3.33% |
Bullish |
Bullish |
|
NYSE Summation Index |
-116, 67% |
Bullish |
Neutral |
|
US Vix |
19.63, -5.67% |
Bullish |
Bullish |
|
Skew |
146 |
Bearish |
Bearish |
|
20 DMA, S & P 500 |
4408, Above |
Bullish |
Neutral |
|
50 DMA, S & P 500 |
4412, Above |
Bullish |
Neutral |
|
200 DMA, S & P 500 |
4486, Above |
Bullish |
Neutral |
|
20 DMA, Nifty |
16936, Above |
Neutral |
Bullish |
|
50 DMA, Nifty |
17113, Above |
Neutral |
Bullish |
|
200 DMA, Nifty |
17068, Above |
Neutral |
Bullish |
|
S & P 500 P/E |
25.92 |
Bearish |
Neutral |
|
Nifty P/E |
23.19 |
Neutral |
Bearish |
|
India Vix |
18.44, -21.32% |
Neutral |
Bullish |
|
Dollar/Rupee |
75.95, -0.43% |
Neutral |
Neutral |
|
Overall |
S & P 500 |
Nifty |
|
|
Bullish Indications |
10 |
11 |
|
|
Bearish Indications |
6 |
6 |
|
|
Outlook |
Bullish |
Bullish |
|
|
Observation |
The S and P was unchanged and the
Nifty rallied last week. Indicators are bullish for the week. The markets are correcting. Watch those stops. |
||
|
On the Horizon |
US – FOMC rate decision minutes, Eurozone - ECB rate
decision minutes, 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 was unchanged and the Nifty rallied last week. Indicators are bullish
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 will likely run
into resistance. (My views don’t matter, kindly pay attention to the levels). The
S&P 500 closed below the 200 DMA recently, after spending a very long
time above it. Monthly MACD’s on most global markets have gone negative
after a long time. This spells trouble ahead and opens up a significant
downside ahead. We could get a reality check in the markets this
week.
We got a bounce that reached the 200 DMA without capitulation. This suggests the lows may
not be in. 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 recently.
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 led the recent rebound and are likely now about to
lead a market decline. The Dollar, tail risk, market breadth, and bond yields, 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 recently turned bearish. 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 4000 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.
The trend is about to change from bullish to bearish and the markets are about to get a reality check and get smashed by a strong dollar. Looking for significant underperformance in the Nifty going forward on rapidly deteriorating macros. Tail risk has been very high of late, as yield curves are about to invert yet again reflecting a major upcoming recession.
The critical levels to watch for the week are 4560 (up) and 4535 (down) on the S & P 500 and 17750 (up) and 17600 (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 yet again. 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.
