Indicator |
Weekly Level / Change |
Implication for S & P 500 |
Implication for Nifty* |
S & P 500 |
4109, - 1.20% |
Bearish |
Bearish |
Nifty |
16584, 1.42% |
Neutral ** |
Bullish |
China Shanghai Index |
3196, 2.08% |
Bullish |
Bullish |
Gold |
1854, 0.34% |
Neutral |
Neutral |
WTIC Crude |
120.26, 4.02% |
Bullish |
Bullish |
Copper |
4.48, 3.56% |
Bullish |
Bullish |
Baltic Dry Index |
2633, -1.79% |
Bearish |
Bearish |
Euro |
1.0719, - 0.07% |
Neutral |
Neutral |
Dollar/Yen |
130.88, 2.97% |
Bullish |
Bullish |
Dow Transports |
14445, 0.00% |
Neutral |
Neutral |
Corporate Bonds (ETF) |
113.19, - 1.82% |
Bearish |
Bearish |
High Yield Bonds (ETF) |
97.37, - 1.92% |
Bearish |
Bearish |
US 10-year Bond Yield |
2.94%, 7.21% |
Bearish |
Bearish |
NYSE Summation Index |
-308, 46% |
Bullish |
Neutral |
US Vix |
24.79, - 3.62% |
Bullish |
Bullish |
Skew |
122 |
Neutral |
Neutral |
CNN Fear & Greed |
Fear |
Bullish |
Bullish |
20 DMA, S & P 500 |
4023, Above |
Bullish |
Neutral |
50 DMA, S & P 500 |
4249, Below |
Bearish |
Neutral |
200 DMA, S & P 500 |
4450, Below |
Bearish |
Neutral |
20 DMA, Nifty |
16229, Above |
Neutral |
Bullish |
50 DMA, Nifty |
16871, Below |
Neutral |
Bearish |
200 DMA, Nifty |
17262, Below |
Neutral |
Bearish |
S & P 500 P/E |
20.76 |
Bearish |
Neutral |
Nifty P/E |
20.52 |
Neutral |
Bearish |
India Vix |
19.90, - 7.34% |
Neutral |
Bullish |
Dollar/Rupee |
77.69, 0.13% |
Neutral |
Neutral |
Overall |
S & P 500 |
Nifty |
|
Bullish Indications |
8 |
9 |
|
Bearish Indications |
8 |
8 |
|
Outlook |
Neutral |
Bullish |
|
Observation |
The S and P fell and the Nifty rallied
last week. Indicators are mixed for the week. The markets are correcting. Watch those stops. |
||
On the Horizon |
US – CPI, Eurozone – ECB rate decision, Japan –
GDP, 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 fell
and the Nifty rallied last week. Indicators are mixed for
the week. Deflation is in the air despite the recent
inflationary spike and the Chinese Yuan is telegraphing just
that. Feels like a 2000-style recession trade has begun, with a decline in
risk assets across the board. (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, and its 200 DMA has started to decline. Monthly
MACDs on most global markets have gone negative after
a long time. This spells trouble ahead and opens up significant
downside risk ahead. We likely have a short-term bottom near
the 3800 mark on the S & P, though no panic yet. We got the 250-point
rally in the S & P 500 and maybe little more is left in this bear market
bounce.
We have got
bounces without capitulation. This suggests the lows may not be in
and the regime is changing from but the dip to sell the rip. Risky
assets are breaking to the downside across the board. 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 major inflationary scares.
The transports
led the most recent rebound and are starting to lead the next decline, The
Dollar, market breadth, and bond yields are continuing to
flash major warning signs despite the recent counter-trend move.
The epic correction signal occurred with retail, hedge funds, and speculators
all in, in the recent melt-up in January, suggesting a major top may
be in. The moment of reckoning is here. 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 Depression (the 1930s) 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 3700 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 has
changed 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.
Yield curves
are about to invert yet again reflecting a major upcoming recession. The critical
levels to watch for the week are 4125 (up) and 4095 (down) on
the S & P 500 and 16650 (up) and 16500 (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 yet again and will likely prove to be a sell on every rise. Gold is
increasingly looking like the asset class to own in the upcoming decade
despite the recent selloff. You can check out last week’s
report for a comparison. Love your thoughts and feedback.