Indicator |
Weekly Level / Change |
Implication for S & P 500 |
Implication for Nifty* |
S & P 500 |
3583, - 1.55% |
Bearish |
Bearish |
Nifty |
17186, - 0.74% |
Neutral ** |
Bearish |
China Shanghai Index |
3072, 1.57% |
Bullish |
Bullish |
Gold |
1650, - 3.46% |
Bearish |
Bearish |
WTIC Crude |
84.65, - 8.62% |
Bearish |
Bearish |
Copper |
3.41, 0.56% |
Bullish |
Bullish |
Baltic Dry Index |
1838, - 6.27% |
Bearish |
Bearish |
Euro |
0.9721, - 0.21% |
Neutral |
Neutral |
Dollar/Yen |
148.75, 0.41% |
Bullish |
Bullish |
Dow Transports |
12503, 0.21% |
Neutral |
Neutral |
Corporate Bonds (ETF) |
100.38, - 1.99% |
Bearish |
Bearish |
High Yield Bonds (ETF) |
87.74, - 0.94% |
Bearish |
Bearish |
US 10-year Bond Yield |
4.02%, 3.49% |
Bearish |
Bearish |
NYSE Summation Index |
-1138, - 17% |
Bearish |
Neutral |
US Vix |
32.02, 2.10% |
Bearish |
Bearish |
Skew |
119 |
Neutral |
Neutral |
CNN Fear & Greed
Index |
Extreme Fear |
Bullish |
Bullish |
20 DMA, S & P 500 |
3696, Below |
Bearish |
Neutral |
50 DMA, S & P 500 |
3933, Below |
Bearish |
Neutral |
200 DMA, S & P 500 |
4161, Below |
Bearish |
Neutral |
20 DMA, Nifty |
17240, Below |
Neutral |
Bearish |
50 DMA, Nifty |
17492, Below |
Neutral |
Bearish |
200 DMA, Nifty |
16988, Above |
Neutral |
Bullish |
S & P 500 P/E |
18.10 |
Bearish |
Neutral |
Nifty P/E |
20.74 |
Neutral |
Bearish |
India Vix |
18.26, - 2.95% |
Neutral |
Bullish |
Dollar/Rupee |
82.37, - 0.55% |
Neutral |
Bullish |
Overall |
S & P 500 |
Nifty |
|
Bullish Indications |
4 |
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 |
UK –
CPI, Eurozone – CPI, China - GDP |
||
*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 and the sell-off is likely to continue with
bounces being sold into. The October swoon is here
tracking closely the 2008 move down in the S and P, implying a panic low right
ahead.
The past week
saw a fall in global markets, following a continued rise in interest rates post
the US CPI report. Transports held up last week after recently making new lows.
The Baltic dry index continued to fall. The dollar gained and is close to its recent
highs. Commodities fell. 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, government bonds, and
commodities are telegraphing just that. Feels like a 2008-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 has changed 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.
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. 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 3300 area
is emerging on the S and P, and 15000 should
arrive on the Nifty in the next few months. The Nifty
which has been out-performing will likely catch up with other assets on the
downside soon.
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 3570 (down) on
the S & P 500 and 17300 (up) and 17100 (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.