Indicator |
Weekly Level / Change |
Implication for S & P 500 |
Implication for Nifty* |
S & P 500 |
3586, - 2.91% |
Bearish |
Bearish |
Nifty |
17094, - 1.34% |
Neutral ** |
Bearish |
China Shanghai Index |
3024, - 2.07% |
Bearish |
Bearish |
Gold |
1668, 1.04% |
Bullish |
Bullish |
WTIC Crude |
79.74, 0.24% |
Neutral |
Neutral |
Copper |
3.39, 0.92% |
Bullish |
Bullish |
Baltic Dry Index |
1760, - 3.08% |
Bearish |
Bearish |
Euro |
0.9801, 1.15% |
Bullish |
Bullish |
Dollar/Yen |
144.79, 1.03% |
Bullish |
Bullish |
Dow Transports |
12058, - 0.59% |
Bearish |
Bearish |
Corporate Bonds (ETF) |
102.45, - 2.25% |
Bearish |
Bearish |
High Yield Bonds (ETF) |
87.85, - 1.08% |
Bearish |
Bearish |
US 10-year Bond Yield |
3.83%, 2.42% |
Bearish |
Bearish |
NYSE Summation Index |
-943, - 83% |
Bearish |
Neutral |
US Vix |
31.62, 5.68% |
Bearish |
Bearish |
Skew |
124 |
Neutral |
Neutral |
CNN Fear & Greed |
Extreme Fear |
Bullish |
Bullish |
20 DMA, S & P 500 |
3845, Below |
Bearish |
Neutral |
50 DMA, S & P 500 |
4012, Below |
Bearish |
Neutral |
200 DMA, S & P 500 |
4213, Below |
Bearish |
Neutral |
20 DMA, Nifty |
17545, Below |
Neutral |
Bearish |
50 DMA, Nifty |
17425, Below |
Neutral |
Bearish |
200 DMA, Nifty |
16982, Above |
Neutral |
Bullish |
S & P 500 P/E |
18.12 |
Bearish |
Neutral |
Nifty P/E |
20.64 |
Neutral |
Bearish |
India Vix |
19.97, - 3.04% |
Neutral |
Bullish |
Dollar/Rupee |
81.52, 0.33% |
Neutral |
Neutral |
Overall |
S & P 500 |
Nifty |
|
Bullish Indications |
5 |
7 |
|
Bearish Indications |
13 |
12 |
|
Outlook |
Bearish |
Bearish |
|
Observation |
The S and P and
the Nifty fell last week. Indicators are bearish for the week. The markets are making new lows.
Watch those stops. |
||
On the Horizon |
US – Employment
data |
||
*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. We have been selling off from resistance near the 200
DMA on the S & P resulting in new lows. The market
is very oversold, so a bounce is due. The
past week saw a fall in global markets, with a continued rise in interest
rates. Transports are leading on the downside after making new recent lows.
The Baltic
dry index resumed its fall. The dollar cooled off a bit. Commodities rebounded.
The Nifty which has been out-performing is catching up with other assets to the
downside. Valuations are expensive, market breadth is weakening, and the
sentiment is strongly negative.
The ongoing
currency crisis should push risky assets to new lows
across the board. Deflation is in the air despite the recent inflationary
spike and the Chinese Yuan, Euro, and commodities are 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 is below the 200 DMA and recently failed at this important mark,
after spending a very long time above it, and its 200 DMA is declining. Monthly
MACDs on most global markets are still negative. This
spells trouble and opens up significant downside risk ahead.
We have got
bounces without capitulation. This
suggests the lows may not be in and the regime is changing from buying the dip
to selling the rip. We may get a final flush down
soon. Risky assets are breaking to the downside across the board. Downward
earnings revisions are likely soon.
The Fed is aggressively
tightening into a recession. Tail risk while moderating is
still high. Deflationary busts often begin after major inflationary
scares. The market has corrected significantly and more is left on the
downside.
The Dollar,
commodities, transports, and bond yields are continuing to flash major warning signs despite the recent
counter-trend move up. The epic correction signal occurred with retail,
hedge funds, and speculators all in, in the recent melt-up in January,
suggesting a major top is 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 3500 area is emerging on the S and P,
and 15000 should arrive on the Nifty in the
next few months. Central banks are 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 getting a reality check and
getting smashed by rising rates and a strong dollar.
Looking for significant underperformance in the Nifty going forward on rapidly
deteriorating macros. Yield curves are inverting yet again reflecting a
major upcoming recession.
The critical
levels to watch for the week are 3600 (up) and 3575 (down) on
the S & P 500 and 17200 (up) and 17000 (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 will get 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.