Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning January 09

 

Asset Class	Weekly Level / Change	Implication for S & P 500	Implication for Nifty*
S & P 500	3895, 1.45%	Bullish	Bullish
Nifty	17860, -1.36%	Neutral **	Bearish
China Shanghai Index	3158, 2.21%	Bullish	Bullish
Gold	1871, 2.43%	Bullish	Bullish
WTIC Crude	73.73, -8.38%	Bearish	Bearish
Copper	3.92, 2.90%	Bullish	Bullish
Baltic Dry Index	1130, -25.41%	Bearish	Bearish
Euro	1.0644, -0.54%	Bearish	Bearish
Dollar/Yen	132.10, 0.76%	Bullish	Bullish
Dow Transports	13876, 3.62%	Bullish	Bullish
Corporate Bonds (ETF)	108.60, 3.01%	Bullish	Bullish
High Yield Bonds (ETF)	92.44, 2.71%	Bullish	Bullish
US 10-year Bond Yield	3.56%, -8.21%	Bullish	Bullish
NYSE Summation Index	-29, 80%	Bullish	Neutral
US Vix	21.13, -2.49%	Bullish	Bullish
Skew	114	Neutral	Neutral
CNN Fear & Greed Index	Neutral	Neutral	Neutral
20 DMA, S & P 500	3876, Above	Bullish	Neutral
50 DMA, S & P 500	3904, Below	Bearish	Neutral
200 DMA, S & P 500	3996, Below	Bearish	Neutral
20 DMA, Nifty	18214, Below	Neutral	Bearish
50 DMA, Nifty	18303, Below	Neutral	Bearish
200 DMA, Nifty	17255, Above	Neutral	Bullish
S & P 500 P/E	20.26	Bearish	Neutral
Nifty P/E	21.49	Neutral	Bearish
India Vix	15.03, 1.06%	Neutral	Bearish
Dollar/Rupee	82.28, -0.53%	Neutral	Bullish
Overall	S & P 500	Nifty
Bullish Indications	12	12
Bearish Indications	6	8
Outlook	Bullish	Bullish
Observation	The S and P was up and the Nifty fell last week. Indicators are bullish for the week. The markets are back at resistance. Watch those stops.
On the Horizon	US – CPI, UK – 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 rallied and the Nifty fell last week. Indicators are bullish for the week. The recent bounce has likely topped near the 200 DMA close to 4100 and decisive downside has resumed as we transition from an inflationary regime to a deflationary collapse. We had 2 months of upside in October and November, and that’s all she wrote in a bear market. The January effect may not materialize this time around. The market is tracking closely the 1973/2008 moves down in the S and P, implying a panic low right ahead in the upcoming months (My views don’t matter, kindly pay attention to the levels). A dollar rebound being the likely catalyst.

The past week saw most global equity markets rally. Most emerging markets except India were up following a fall in interest rates. Transports led the move up. The Baltic dry index cratered. The dollar rebounded. Commodities fell except for precious metals and copper. Valuations are very expensive, market breadth rebounded, and the sentiment is neutral. No fear yet though, as complacency reigns supreme. We could see any rebound to the 50/200 DMA near 3900/4000 being sold into.

The ongoing currency crisis should resume and push risky assets to new lows across the board. Deflation is in the air despite the recent inflationary spike and the Chinese Yuan, Euro, commodities, and Yen are telegraphing just that. Feels like a 2008-style recession trade has begun, with a potential decline in risk assets across the board.

The S&P 500 is failing near the 200 DMA and is encountering resistance near 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 from recent lows 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 should continue breaking to the downside across the board. Downward earnings revisions are underway.

The Fed is aggressively tightening into a recession. Deflationary busts often begin after major inflationary scares. The market has corrected significantly and more is left on the downside. The Dollar, commodities, and, bond yields are continuing to flash major warning signs despite recent counter-trend moves.

The epic correction signal occurred with retail, hedge funds, and speculators all in, in January 2022, suggesting a major top is in. The moment of reckoning is here.   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 rallied over 120% in our most recent rally of the COVID-19 lows. 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. Global yield curves have inverted significantly reflecting a major upcoming recession. Looking for significant underperformance in the Nifty going forward on rapidly challenging macros. 

The critical levels to watch for the week are 3910 (up) and 3880 (down) on the S & P 500 and 17950 (up) and 17800 (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. You can check out last week’s report for a comparison. Love your thoughts and feedback.

 

 

S&P 500, Energy, Gold, and Bitcoin Futures Overview from Mooranalytics.com for 1/3/23

 S&P 500 (H)

On a higher timeframe basis:  On 1/18/22 the break below the 4629.25 line warned of decent pressure and negated the medium-term bullish trend we were in since 3/23/20.  On 8/22/22 we left a medium-term bearish reversal above, which has brought in 676.75 of pressure from the 4178.75  open.  These are ON HOLD.  On a lower timeframe basis:  I warned of possible exhaustion at 3531.25-04.75 which had the potential to trigger a bullish correction with a minimum target of 3793.00—we held this with a 3502.00 low and have bounced 678.00, taking the target out; but the higher timeframe minimum target is 4190.50—we came just shy of this with a 4180.00 high this morning.  The decent trade back above 3589.00-8.25 has also brought in 591.00 of the decent strength we are looking for above.   I warned of an area of correction at 3647.50-32.75 that we may see a bounce out of—we held this with a 3641.50 low and bounced at 538.50.  The penetration above 3728.50 (-60 per/hour) has brought in 451.50 of strength. We held the exhaustion on the downside with a 3704.25 low and bounced 475.75. These are ON HOLD.   I warned if the 4180.00 high held, it would likely start a bearish correction to exceed 224.00 from the high—we have seen 391.50.  I noted the daily kind of sell-off we saw on 12/13 is rarely followed by strength in the ensuing days—we have come off 267.00 from the close at 4055.50.  The solid trade below 4047.50 I warned would bring in solid pressure, likely for days—we have seen 259.00 so far.  The trade below 3967.75 (+36 per/hour) projects this downward 175.00 (+)—we have seen 179.25 so far.  These are ON HOLD.   The trade above 3867.50 (-.37 per/hour starting at 9:30am) should bring in decent strength; but if we break back below decently, look for decent pressure.  Decent trade below 3827.32 (+.27 per/hour starting at 9:30am) will project this downward 80.00 (+); but if we break below here decently and back above decently, look for decent short covering.  There are levels of possible exhaustion to contend at 3776.00-61.00 and 3647.25-00. 

Gold (G)

On a higher timeframe basis: I cautioned on 8/16/18 the break above $1,179.7-$1,183.7 warned of renewed strength.  We have seen $905.5.  We held an exhaustion within this at $1,275.6-$1,269.0 with a $1,274.6 low and rallied $814.6.  The break above $1,347.0 projected this upward $80 minimum, $320 (+) maximum.  We have attained $744.2.  We held another exhaustion within this at $1,416.0-$1,413.7 with a $1,412.1 low and rallied $676.9. On 4/2 we left a bullish reversal below.  We have seen $470.7.  These are ON HOLD.  We held major exhaustion at $2,071.6-93.2 with a $2,089.2 high and rolled over $46.7.  We rolled over from $2,079.6 for $456.6. These are ON HOLD.  On a lower timeframe basis:  The break above $1,641.2 (+1 tic per/hour) has brought in $215.4 of strength.  The trade above $1,667.8 (-.5 of a tic per/hour) projects this upward $50 (+).  We have attained $188.8. On 11/4 we left a minor bullish reversal below—we have seen $203.9 from the open at $1,652.7.   The solid trade above $1,679.5 (-1 tic per/hour) put this above a major formation --we are projected upward $80 minimum.  We have attained $177.1 so far.  The trade above $1,716.6  (-.3 of a tic per/hour) has brought in $140.0 of higher trade.  The trade above $1,752.1 (-.3 of a tic per/hour) has brought in $104.5 of the strength warned about.  We are in a third stretch of a new, lower timeframe bull structure, and taking out $1,806.0 also put this in a third stretch of a higher timeframe bull structure as well.  The break above $1,769.4 has brought in $87.2 of strength.  I would be aware of areas of possible exhaustion to contend with on the way up at $1,850.8 and $1,907.1-23.3, which are both a combination of lower and higher timeframe exhaustion. 

 

Bitcoin

On a higher timeframe basis: The roll over on 11/10/21 put this into a bearish trend.  I warned the selloff should exceed $13,000 from the high of $69,355—we have seen $54,430 of this.  The trade below $63,285 (+15 per/hour) has brought in $48,360 of the pressure warned about below.  The decent trade below $61,890 (+15 per/hour) has brought in $46,965 of the pressure warned about below.  We held exhaustion on a bullish correction of the move down at $59,545 and rolled over $44,620.  We have come off $36,080 from the $51,005 close. On a lower timeframe basis:  The trade below $45,920 brought in $30,995 of pressure.  The trade below $43,140 warned of additional pressure.  We have seen $28,215.  The failure below $40,895 brought in $25,970 of renewed weakness.  The failure below $38,160 warned of decent pressure—we have seen $23,235 of a $12,000 (+) maximum.  The trade below $34,830 put this below a significant bearish formation that projected this downward $13,000 minimum, $35,000 (+) maximum.  We have attained $19,905.  On 5/9 we also left an additional significant bearish formation above, which warned of lower trade for weeks.  The trade below $30,115 has brought in $15,190 of pressure.  The trade below $27,275 has brought in $12,350 of pressure. We held exhaustion at $25,265-495 with a $25,270 high and rolled over $10,345.  We held exhaustion at $22,630 with a $22,875 high and rolled over $7,950.   We held exhaustion above at $21,200-350 with a $21,400 high and rolled over $6,475.  The trade below $20,445 (+6 per/hour) projected this downward $1,050 (+).  We attained $5,520.  The break below $18,065 (-5 tics per/hour) brought in $3,140 of the pressure warned about.  The trade below $17,082 (-1.6 tics per/hour) has brought in $992 of pressure.  The trade below $16,809 (+3 tics per/hour) projects this downward $900 (+)—we have attained $719 of this.  The trade below $16,669 (+3 per/hour) also warned of decent pressure—we have seen $579 of this; but if we break back above decently, look for decent short covering.  This will come in at $16,923 (+3 per/hour starting at 6:00am).  However, the break below $16,275-60 and back above is currently bringing in short covering.

 

Crude Oil (WTI) (G)

We settled in a bull leg.  Settlement below $79.56 will start this in a new bear leg.  On a macro basis:  On 4/29/20 we left a bullish reversal below—we have seen $115.13 from that open at $15.37 in the (N). On 5/5/20 we left a medium-term bullish reversal below. We have seen $107.05 from $23.45. We held exhaustion with a $34.04 low and rallied $96.46. The trade above $45.21 warned of renewed strength—we have seen $85.29 of this. The break above $47.92 has brought in $82.58 of the strength warned about above. The trade above $52.24 has brought in $78.26 of the strength warned about above. We took out a major trendline at $55.15, which warned of significant strength. We have seen $75.35.  The break above $57.45-8.02 projected this upward $56 minimum, $89 (+) maximum. We attained $72.48.  The trade above $59.50 brought in $71.00 of strength. We have seen $61.02 from $69.48.   The trade above $69.70 has brought in $60.80.  The trade above $71.36 attained $59.14.  These are ON HOLD.  On a shorter-term basis:  Trade below $119.15 brought in $49.07 of pressure. Trade below $115.90 projected this downward $8.85 (+). We attained $45.82. We held corrective exhaustion at $114.05 and rolled over $43.97. The trade below $111.00 brought in $40.92 of pressure. The trade below $105.73 brought in $35.65 of pressure. The trade below $104.48 projected this down $17.40 (+) maximum. We attained $34.40. The trade below $99.24 brought in $29.16 of pressure. The trade below $97.18 projected this down $8.30 (+) maximum. We attained $27.58. We held exhaustion at $97.66 and rolled over $27.58.  The trade below $95.76-40 brought in $25.32 of pressure.  We held exhaustion with a $92.58 high and rolled over $22.50.  These are OFF HOLD.   We held exhaustion below with a $70.31 low and bounced $11.19 into a lower timeframe bullish correction against the move down from $83.34.  The maintained gap higher on 12/13 was also a sign of bullishness.  The trade above $76.64 (-1.8 tics per/hour) brought in $4.86 of strength.  These are ON HOLD.  The trade below $78.36 (+3 tics per/hour) only brought in $1.57 before short covering back above, and then failing the line. We are now likely in a bearish correction/trend against the move up from $70.31.

 

Natural Gas (G)

We settled in a bear leg.  Settlement above 4980 will start this in a bull leg.  On a higher timeframe basis:  I noted the week of April 26^th, 2021, we also broke back above a significant formation on the Weekly charts at 2779 that warned of continued strength in general—we have seen 7251 tics of this.  The trade above 2896 (+.5 of a tic per/hour) brought in 7134 tics of the continued strength we were looking for above.  We held exhaustion at 2910-894 with a 2914 low and rallied for 7116 tics.  We left a medium-term bullish reversal below on 6/1 that warned of renewed strength for days/weeks.  We have seen 6963 tics from 3067 so far.  The trade above 3108-09 attained 6921 tics.  The trade above 3304 brought in 6726 tics of strength.   On 2/15 we left a moderate bullish formation below that warned of higher trade for days—we saw 5438 tics from the 4592 close.  These are ON HOLD.  On a shorter-term basis:  The failure back below 8440 brought in 4424 tics of pressure (in previous contracts).  The trade below 8208 warned of decent pressure.  We attained 4192 tics so far (in previous contracts).  I warned decent trade below 7550 would be a renewed sign of weakness—we came off 3172 tics.  On 12/19 we left a moderate bearish formation above.  The trade below 5210 (+1 tic per/hour) has brought in decent pressure.  I would NOTE: The trade below 5136-4993 last week projects this downward $2.80 minimum, $5.30 (+) maximum, which could be seen within 3 months’ time.  If we break solidly back above where this comes in this week at 5021-164, this will warn of solid higher trade for weeks, likely toward 7800 (+), although this is not a projection per se.

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