Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning January 23

 

Asset Class	Weekly Level / Change	Implication for S & P 500		Implication for Nifty*
S & P 500	3973, -0.66%	Bearish	Bearish
Nifty	18028, 0.40%	Neutral **	Neutral
China Shanghai Index	3265, 2.18%	Bullish	Bullish
Gold	1928, 0.41%	Neutral	Neutral
WTIC Crude	81.96, 2.73%	Bullish	Bullish
Copper	4.28, 1.74%	Bullish	Bullish
CRB Index	279, 0.92%	Bullish	Bullish
Baltic Dry Index	763, -19.34%	Bearish	Bearish
Euro	1.0856, 0.26%	Neutral	Neutral
Dollar/Yen	129.59, 1.34%	Bullish	Bullish
Dow Transports	14356, -0.06%	Neutral	Neutral
Corporate Bonds (ETF)	110.55, 0.07%	Neutral	Neutral
High Yield Bonds (ETF)	93.39, -0.61%	Bearish	Bearish
US 10-year Bond Yield	3.48%, -0.46%	Neutral	Neutral
NYSE Summation Index	616, 60%	Bullish	Neutral
US Vix	19.85, 8.17%	Bearish	Bearish
Skew	120	Neutral	Neutral
CNN Fear & Greed Index	Greed	Bearish	Bearish
20 DMA, S & P 500	3889, Above	Bullish	Neutral
50 DMA, S & P 500	3929, Above	Bullish	Neutral
200 DMA, S & P 500	3969, Above	Bullish	Neutral
20 DMA, Nifty	18043, Below	Neutral	Bearish
50 DMA, Nifty	18284, Below	Neutral	Bearish
200 DMA, Nifty	17288, Above	Neutral	Bullish
S & P 500 P/E	20.66	Bearish	Neutral
Nifty P/E	21.46	Neutral	Bearish
India Vix	13.79, -4.65%	Neutral	Bullish
Dollar/Rupee	80.99, -0.36%	Neutral	Neutral
Overall	S & P 500	Nifty
Bullish Indications	9	7
Bearish Indications	6	8
Outlook	Bullish	Bearish
Observation	The S and P fell and the Nifty was up last week. Indicators are mixed for the week. The markets are back at resistance. Watch those stops.
On the Horizon	US – 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 fell and the Nifty rallied last week. Indicators are mixed for the week. The recent bounce is encountering resistance near the 200 DMA close to 4000 and downside is likely as we transition from an inflationary regime to a deflationary collapse. The January effect may terminate abruptly this time around. The market is tracking closely the 1973 move 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 US equity markets fall, and high beta outperformed. Most emerging markets were up following a fall in interest rates. Transports were unchanged. The Baltic dry index continued to crater. The dollar was unchanged. Commodities rallied. Valuations are very expensive, market breadth rebounded, and the sentiment is improving. No fear yet though, as complacency reigns supreme. We could see any rebound to the 200 DMA near 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 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 challenging macros. 

The critical levels to watch for the week are 3985 (up) and 3960 (down) on the S & P 500 and 18100 (up) and 17950 (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. You can check out last week’s report for a comparison. Love your thoughts and feedback.

 

 

Mid-Week Market Update from Mooranalytics.com

 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.  These are OFF 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.  This is ON HOLD.   The trade above 3851.94 (-.37 per/hour) warned of renewed strength—we have seen 219.50.  The trade above 3874.02(-42 per/hour) has brought in 161.25 of strength.  We are in a lower/medium-time frame bull structure.   Today has a good likelihood of seeing range expansion.   

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.  The break above $1,347.0 projected this upward $80 minimum, $320 (+) maximum.  We have attained $744.2.  These are OFF 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 by $456.6. These are ON HOLD.  On a lower timeframe basis:  The break above $1,641.2 (+1 tic per/hour) has brought in $290.6 of strength.  The solid trade above $1,679.5 (-1 tic per/hour) put this above a major formation --we are projected upward of $80 minimum.  We have attained $252.3 so far.  The break above $1,769.4 has brought in $162.4 of strength.  The break above $1,860.0 warned of renewed strength—we have seen $71.8.  I warned we took out exhaustion at $1,907.1-23.3, opening up the upside to higher trade—we traded $8.5 higher before rolling over.  Decent trade below $1,886.1 (+1 tic per/hour starting at 5:00am) should bring in decent pressure.   

Bitcoin

On a higher timeframe basis: The rollover 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.  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 $34,830 put this below a significant bearish formation that projected this downward $13,000 minimum, $35,000 (+) maximum.  We have attained $19,905.  We held exhaustion at $25,265-495 with a $25,270 high and rolled over $10,345.  These are ON HOLD.  The break back above $16,275-60 has brought in $5,450 of strength.  The trade above $17,245 (+3 per/hour) warns of continued higher trade—we have seen $4,480. The trade above $17,935 has brought in $3,790 of strength.  Trade below $20,690-80 will warn of pressure, but will also put this down in the gap.

Crude Oil (WTI) (H)

 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). 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.  These are OFF HOLD.  On a shorter-term basis:  Trade below $119.15 brought in $49.07 of pressure. The trade below $111.00 brought in $40.92 of pressure. The trade below $97.18 projected this down $8.30 (+) maximum. These are ON HOLD.   We held exhaustion below with a $70.31 low and bounced $11.86.  We held exhaustion at $72.93 with a $72.74 low, which I said had the potential to start a multi-week bull structure, and bounced $9.71.  The trade above $79.07 projects this upward $8.10 minimum, $25.50 (+) maximum; but if we break back below decently, look for decent pressure—this will come in at $78.46 today.  The trade above $80.00 (-.5 of a tic per/hour) also projects this higher; but if we fail back below decently, look for decent pressure.  This will come in at $79.91 (-.5 of a tic per/hour starting at 8:00am).

Natural Gas (G)

On a higher timeframe basis:  The failure back below 8440 brought in 4920 tics of pressure (in previous contracts).  The trade below 8208 warned of decent pressure.  I warned decent trade below 7188 would be a renewed sign of weakness—we came off 3668 tics.   I would NOTE: The trade below 5136-4993 projects this downward $2.80 minimum, $5.30 (+) maximum, which could be seen within 3 month’s time—we have traded $1.690 lower.  These are ON HOLD.   If we break solidly back above 5102-247, this will warn of solid higher trade for weeks, likely toward 7800 (+).  On a shorter-term basis:  The trade above 3733 (-8 tics per/hour) warned of strength—we only saw initial strength before rolling over and traveling down above it, but this also warned the downside may wane temporarily, drift sideways, and then see higher trade (which is what we are seeing).  We are likely entering into a bullish correction/trend on a lower timeframe before (if) resuming lower trade.  We came just shy of exhaustion below at 3356 with a 3384 low, which I did not suggest buying against, as I had a fade suggestion around 3422 just above.  Decent trade above 3707 (-2.6 tics per/hour starting at 8:00am) should bring in decent strength; but if we break above here decently and back below decently, look for decent pressure. 

 

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