Indicator |
Weekly Level / Change |
Implication for S & P 500 |
Implication for Nifty* |
S & P 500 |
4393, -2.13% |
Bearish |
Bearish |
Nifty |
17476, -1.74% |
Neutral ** |
Bearish |
China Shanghai Index |
3211, - 1.25% |
Bearish |
Bearish |
Gold |
1973, 1.38% |
Bullish |
Bullish |
WTIC Crude |
106.51, 8.40% |
Bullish |
Bullish |
Copper |
4.72, - 0.10% |
Neutral |
Neutral |
Baltic Dry Index |
2137, 3.99% |
Bullish |
Bullish |
Euro |
1.0809, - 0.62% |
Bearish |
Bearish |
Dollar/Yen |
126.36, 1.64% |
Bullish |
Bullish |
Dow Transports |
14844, 2.58% |
Bullish |
Bullish |
Corporate Bonds (ETF) |
115.38, - 1.55% |
Bearish |
Bearish |
High Yield Bonds (ETF) |
99.92, - 0.06% |
Neutral |
Neutral |
US 10-year Bond Yield |
2.83%, 3.87% |
Bearish |
Bearish |
NYSE Summation Index |
-185, -66% |
Bearish |
Neutral |
US Vix |
22.70, 7.28% |
Bearish |
Bearish |
Skew |
134 |
Neutral |
Neutral |
20 DMA, S & P 500 |
4503, Below |
Bearish |
Neutral |
50 DMA, S & P 500 |
4418, Below |
Bearish |
Neutral |
200 DMA, S & P 500 |
4495, Below |
Bearish |
Neutral |
20 DMA, Nifty |
17471, Above |
Neutral |
Bullish |
50 DMA, Nifty |
17165, Above |
Neutral |
Bullish |
200 DMA, Nifty |
17148, Above |
Neutral |
Bullish |
S & P 500 P/E |
22.20 |
Bearish |
Neutral |
Nifty P/E |
22.92 |
Neutral |
Bearish |
India Vix |
17.79, 0.55% |
Neutral |
Bearish |
Dollar/Rupee |
76.33, 0.52% |
Neutral |
Bearish |
Overall |
S & P 500 |
Nifty |
|
Bullish Indications |
5 |
8 |
|
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 are correcting. Watch those stops. |
||
On the Horizon |
China – GDP, PBOC rate decision, Eurozone - CPI |
||
*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 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 risk ahead. We
could continue to see a big sell-off in the markets this week, with some significant
downside in the weeks to come.
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 most recent rebound and are starting to
lead the next decline, The Dollar, tail risk, market breadth, and bond yields, are continuing to flash 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 4405 (up) and 4380 (down) on the S & P
500 and 17550 (up) and 17400 (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.