Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning February 06

 

Asset Class	Weekly Level / Change	Implication for S & P 500		Implication for Nifty*
S & P 500	4137, 1.62%	Bullish	Bullish
Nifty	17854, 1.42%	Neutral **	Bullish
China Shanghai Index	3263, -0.04%	Neutral	Neutral
Gold	1878, -3.04%	Bearish	Bearish
WTIC Crude	73.23, -8.84%	Bearish	Bearish
Copper	4.03, -4.53%	Bearish	Bearish
CRB Index	266, -4.13%	Bearish	Bearish
Baltic Dry Index	621, -8.14%	Bearish	Bearish
Euro	1.0795, -0.66%	Bearish	Bearish
Dollar/Yen	131.19, 1.03%	Bullish	Bullish
Dow Transports	15518, 7.15%	Bullish	Bullish
Corporate Bonds (ETF)	110.54, 0.04%	Neutral	Neutral
High Yield Bonds (ETF)	93.67, 0.30%	Neutral	Neutral
US 10-year Bond Yield	3.52%, 0.23%	Neutral	Neutral
NYSE Summation Index	1105, 25%	Bullish	Neutral
US Vix	18.33, -0.97%	Bullish	Bullish
Skew	123	Neutral	Neutral
CNN Fear & Greed Index	Extreme Greed	Bearish	Bearish
20 DMA, S & P 500	4008, Above	Bullish	Neutral
50 DMA, S & P 500	3957, Above	Bullish	Neutral
200 DMA, S & P 500	3950, Above	Bullish	Neutral
20 DMA, Nifty	17898, Below	Neutral	Bearish
50 DMA, Nifty	18187, Below	Neutral	Bearish
200 DMA, Nifty	17294, Above	Neutral	Bullish
S & P 500 P/E	22.11	Bearish	Neutral
Nifty P/E	20.86	Neutral	Bearish
India Vix	14.40, -16.87%	Neutral	Bullish
Dollar/Rupee	82.23, 0.89%	Neutral	Bearish
Overall	S & P 500	Nifty
Bullish Indications	8	7
Bearish Indications	8	11
Outlook	Neutral	Bearish
Observation	The S and P and the Nifty rallied last week. Indicators are mixed for the week. The markets are back at resistance. Watch those stops.
On the Horizon	Eurozone – German CPI, EU leaders summit, UK – 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 and the Nifty rallied last week. Indicators are mixed for the week. The recent bounce has taken out resistance near the 50 WMA close to 4030 and the upside is likely capped as we transition from an inflationary regime to a deflationary collapse. 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 rally, as high beta outperformed. Emerging market performances were mixed, as interest rates were little changed. Transports led the way up. The Baltic dry index continued to crater. The dollar rose. Commodities fell across the board. Valuations are very expensive, market breadth improved, and the sentiment is improving and close to extremes. No fear yet though, as complacency reigns supreme.

The recent 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 finally above the 200 DMA, while this is a short-term positive, 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 4150 (up) and 4125 (down) on the S & P 500 and 17950 (up) and 17750 (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.

 

 

S&P 500, Energy, Gold, and Bitcoin Futures Overview from Mooranalytics.com for the week beginning 1/30/23

 S&P 500, Energy, Gold, and Bitcoin Futures Overview from Mooranalytics.com for 1/30/23

S&P 500 

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.  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 257.25.  The trade above 3874.02(-42 per/hour) has brought in 235.25 of strength.  These are OFF HOLD.  On a lower timeframe basis:  We held 3964.15-54.00 exhaustion with a 3963.25 low and rallied 146.00.   We came shy of exhaustion I had listed on the upside at 4117.75 with a 4109.25 high and rolled over, although I did not have a sell suggestion against this.  Decent trade below 3952.39 (+.28 per/hour starting at 9:30am) will warn of decent pressure for 162.00 (+), but it would be preferable to see a bounce off of this line before breaking below it added credibility.  If we break below here decently and back above decently, look for decent strength.

 

Gold 

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 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 $302.6 of strength.  The solid trade above $1,679.5 (-1 tic per/hour) put this above a major formation --we are projected upward to $80 minimum.  We have attained $264.3 so far.  The break above $1,769.4 has brought in $174.4 of strength.  The break above $1,860.0 warned of renewed strength—we have seen $83.8.  These are ON HOLD.  The failure below $1,959.6 (+.5 of a tic per/hour) warned of pressure—we attained $26.6 in the (J) equivalent to that of (G).   

 

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 $7,805 of strength.  The trade above $17,245 (+3 per/hour) warns of continued higher trade—we have seen $6,835. The trade above $17,935 has brought in $6,145 of strength.  Trade above $25,270-350 will be an additional sign of strength.  Decent trade below $23,435 (+16 per/hour) will put this below a steep formation that will warn of pressure; but if we break below decently and back above decently, look for decent short covering.  Trade below $21,795-400 will warn of pressure. 

 

Crude Oil (WTI) 

 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 OFF HOLD.   We held exhaustion below with a $70.31 low and bounced $12.35.  The trade above $79.07 projects this upward $7.20 minimum, $24.60 (+) maximum; but if we break back below decently, look for decent pressure—this will come in at $76.95 today.  These are ON HOLD.  The trade below $80.58 (+2.5 tics per/hour) warned of pressure--we finally rolled over Friday.  Decent trade above $80.51-61 (+1.2 tics per/hour) will warn of decent strength.  Decent trade above $81.97-2.06 (-.3 of a tic per/hour) will project this upward $3.30 minimum, $8.00 (+) maximum.

 

Natural Gas (G)

On a higher timeframe basis:  The failure back below 8440 brought in $5.760 of pressure (in previous contracts).  The trade below 8208 warned of decent pressure.  We attained $5.528 so far.  I warned decent trade below 7188 would be a renewed sign of weakness—we came off  $4.508 tics.  On 12/19 we left a moderate bearish formation above.  I would NOTE: The trade below 5136-4993 projects this downward $2.270 minimum, $4.770 (+) maximum, which could be seen within 3 months’ time—we have traded $2.313 lower.  On a shorter-term basis:  The trade below 3016 (-2.5 tics per/hour) has brought in 336 tics of the pressure warned about.   A maintained gap higher will leave a minor bullish reversal below.  Decent trade back above where this comes in at 2818 (-2.5 tics per/hour starting at 8:00am) should bring in decent strength.  Decent trade above 2902 (-.7 of a tic per/hour starting at 8:00am) should bring in additional strength.  I would note that we are holding possible exhaustion below at 2592-83 with a 2612 low, and have bounced 133 tics.

 

 

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