Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning February 20

 

Asset Class	Weekly Level / Change	Implication for S & P 500		Implication for Nifty*
S & P 500	4079, -0.28%	Neutral	Neutral
Nifty	17944, 0.49%	Neutral **	Neutral
China Shanghai Index	3224, -1.12%	Bearish	Bearish
Gold	1852, -1.30%	Bearish	Bearish
WTIC Crude	76.55, -3.55%	Bearish	Bearish
Copper	4.13, 2.76%	Bullish	Bullish
CRB Index	268, -1.87%	Bearish	Bearish
Baltic Dry Index	538, -10.63%	Bearish	Bearish
Euro	1.0694, 0.18%	Neutral	Neutral
Dollar/Yen	134.15, 2.09%	Bullish	Bullish
Dow Transports	15136, 0.62%	Bullish	Bullish
Corporate Bonds (ETF)	107.04, -0.67%	Bearish	Bearish
High Yield Bonds (ETF)	91.38, -0.38%	Neutral	Neutral
US 10-year Bond Yield	3.82%, 2.02%	Bearish	Bearish
NYSE Summation Index	849, -14%	Bearish	Neutral
US Vix	20.02, -2.48%	Bullish	Bullish
Skew	123	Neutral	Neutral
CNN Fear & Greed Index	Greed	Bearish	Bearish
20 DMA, S & P 500	4094, Below	Bearish	Neutral
50 DMA, S & P 500	3978, Above	Bullish	Neutral
200 DMA, S & P 500	3943, Above	Bullish	Neutral
20 DMA, Nifty	17848, Above	Neutral	Bullish
50 DMA, Nifty	18034, Below	Neutral	Bearish
200 DMA, Nifty	17331, Above	Neutral	Bullish
S & P 500 P/E	21.80	Bearish	Neutral
Nifty P/E	21.15	Neutral	Bearish
India Vix	13.09, 2.67%	Neutral	Bearish
Dollar/Rupee	82.77, 0.31%	Neutral	Neutral
Overall	S & P 500	Nifty
Bullish Indications	6	6
Bearish Indications	11	11
Outlook	Bearish	Bearish
Observation	The S and P and the Nifty were unchanged last week. Indicators are bearish for the week. The markets are back at resistance. Watch those stops.
On the Horizon	Eurozone – German CPI, CPI, German GDP, US – GDP, China – PBoC 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 500 and the Nifty were little changed last week. Indicators are bearish for the week. The recent bounce has taken out resistance near the 50 WMA close to 4020 and the upside is likely capped as we transition from an inflationary regime to a deflationary collapse. The Nifty is encountering resistance near its 20WMA near 17980. 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 mostly unchanged. Most emerging markets fell, as interest rates rose. Transports outperformed. The Baltic dry index continued to fall. The dollar was unchanged. Commodities fell. Valuations are very expensive, market breadth declined, and the sentiment is bullish 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 4090 (up) and 4065 (down) on the S&P 500 and 18050 (up) and 17850 (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.

 

 

Weekly Market Recap from Mooranalytics.com

S&P 500, Energy, Gold, and Bitcoin Futures Overview from Mooranalytics.com for 2/17/23

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.  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, and a higher timeframe target of 4190.50—we held this with a 3502.00 low and have bounced 706.50, taking out both targets.    These are ON HOLD.  On a lower timeframe basis:  The trade above 3851.75 warned of renewed strength—we have seen 356.75.  We held 3964.15-54.00 exhaustion with a 3963.25 low and rallied 245.25.   These are ON HOLD.  We are in a bearish correction/trend against the move up from 378850.  Decent trade above 4110.72 (+41 per/hour starting at 9:30am) will warn of decent strength, and possibly a run for 4208.50 (although this is not a projection necessarily).  If this is a correction, which I think is likely, there are areas of possible exhaustion at 4048.00-26.75, 3998.50-83.00, 3949.00-47.50, and 3878.50-57.25.  I would also NOTE that we have entered into the ideal timeframe for one of these to hold, and if we do this could start a whole new medium-timeframe bull structure that could last for months. 

 

Gold (J)

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 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 $334 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 $295.7 so far.  The break above $1,769.4 has brought in $205.8 of strength.  The break above $1,860.0 warned of renewed strength—we have seen $115.2.  These are ON HOLD.  The trade below $1,966.7 (+.6 of a tic per/hour) has brought in $139.0 of the decent pressure warned about.  The trade below $1,935.3 (+2 tics per/hour) projected this downward an additional $45 (+)—we have attained $107.6 so far.  The break below $1,886.2 (+1.4 tics per/hour) warns of decent pressure—we have seen $58.5 so far.  I would be aware of possible exhaustion at  $1,826.1, $1,816.9, $1,800.3-796.7 (a key area), and lower.  We are holding the upper of these currently with a $1,827.7 low.  Decent trade above $1,842.7 (-5 per/hour starting at 6:00am) will warn of decent short covering, but this is steep to lean against—however, if we break above here decently and back below decently, I would lean against it as a short.  Decent trade above $1,845.1 (-1.3 per/hour starting at 6:00am) just above should bring in decent short covering, and is an easier slope to lean against. 

 

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.  We have come off $36,080 from the $51,005 close. These are ON HOLD.  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.  These are OFF HOLD.  The break back above $16,275-60 has brought in $9,070 of strength.  The trade above $17,245 (+3 per/hour) warned of continued higher trade—we have seen $7,745. These are ON HOLD.  I cautioned we were either A.) starting a new, lower timeframe bullish structure, or B.) in the last stretch of the move up from the lows—I think the later of the two.  This has given confirmation by holding exhaustion at $25,019-279 with a $25,345 high, failing back below $24,385, taking out the trendline below and rolling over $1,005 into a likely bearish correction.  I warned if this holds and it starts a bearish correction, it should exceed $3,070 from the high—which would make the minimum target $22,275.  Trade above $25,270-350 will be a sign of renewed strength.

 

Crude Oil (WTI) (J)

We settled in a bull leg, but I would disregard this.  Settlement below $79.92 will start this in a 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. 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. These are ON HOLD.   The trade above $75.76 (-2 tics per/hour) projects this upward $3.20 (+). We attained $5.28.  I warned today has a good likelihood of seeing range expansion.  This looks weak coming out of the gate. A maintained gap lower will warn of renewed pressure. 

 

Natural Gas (G)

We settled in a bear leg.  Settlement above 2514 will start this in a bull leg.  On a higher timeframe basis:  The failure back below 8440 brought in $6.099 of pressure (in previous contracts).  The trade below 8208 warned of decent pressure.  We attained $5.867 so far.  I warned decent trade below 7188 would be a renewed sign of weakness—we came off  $4.847.  On 12/19 we left a moderate bearish formation above.  I would NOTE: The trade below 5136-4993 projects this downward $2.270 minimum, $4.700 (+) maximum—the maximum of which could be seen within another 1.5 month’s time.  We have traded $2.652 lower.  On a shorter-term basis:  The trade below 3016 (-2.5 tics per/hour) has brought in 675 tics of the pressure warned about.   Decent trade below 2398-93 will project this downward 240 tics (+); but if we break below here decently and back above decently, look for decent short covering.    

 

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