|
Asset
Class |
Weekly
Level / Change |
Implication
for S & P 500 |
Implication for Nifty* |
|
S
& P 500 |
4358,
5.85% |
Bullish |
Bullish |
|
Nifty |
19231,
0.96% |
Neutral
** |
Bullish |
|
China
Shanghai Index |
3031,
0.43% |
Neutral |
Neutral |
|
Gold |
1999,
0.04% |
Neutral |
Neutral |
|
WTIC Crude |
80.51,
-5.88% |
Bearish |
Bearish |
|
Copper |
3.68,
0.97% |
Bullish |
Bullish |
|
CRB
Index |
282, -1.17% |
Neutral |
Neutral |
|
Baltic
Dry Index |
1462,
-6.46% |
Bearish |
Bearish |
|
Euro |
1.0721,
1.49% |
Bullish |
Bullish |
|
Dollar/Yen |
149.37,
-0.15% |
Neutral |
Neutral |
|
Dow
Transports |
14503,
7.06% |
Bullish |
Bullish |
|
Corporate
Bonds (ETF) |
101.91,
2.69% |
Bullish |
Bullish |
|
High
Yield Bonds (ETF) |
91.24,
3.55% |
Bullish |
Bullish |
|
US
10-year Bond Yield |
4.56%,
-5.92% |
Bullish |
Bullish |
|
NYSE
Summation Index |
-627,
23% |
Bullish |
Neutral |
|
US
Vix |
14.91,
-29.90% |
Bullish |
Bullish |
|
Skew |
140 |
Bearish |
Bearish |
|
CNN
Fear & Greed Index |
Fear |
Bullish |
Bullish |
|
20
DMA, S & P 500 |
4275,
Above |
Bullish |
Neutral |
|
50
DMA, S & P 500 |
4348,
Above |
Bullish |
Neutral |
|
200
DMA, S & P 500 |
4248,
Above |
Bullish |
Neutral |
|
20
DMA, Nifty |
19408,
Below |
Neutral |
Bearish |
|
50
DMA, Nifty |
19559,
Below |
Neutral |
Bearish |
|
200
DMA, Nifty |
18649,
Above |
Neutral |
Bullish |
|
S
& P 500 P/E |
24.08 |
Bearish |
Neutral |
|
Nifty
P/E |
20.90 |
Neutral |
Bearish |
|
India
Vix |
10.88,
-0.21% |
Neutral |
Neutral |
|
Dollar/Rupee |
83.14,
-0.15% |
Neutral |
Neutral |
|
Overall |
S
& P 500 |
Nifty |
|
|
Bullish
Indications |
13 |
11 |
|
|
Bearish
Indications |
4 |
6 |
|
|
Outlook |
Bullish |
Bullish |
|
|
Observation |
The
S&P 500 and the Nifty rallied last week. Indicators are bullish for the
week. Markets
have bottomed. Watch those stops. |
||
|
On
the Horizon |
Eurozone –German 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&P 500
and the Nifty rallied last week. Indicators are bullish for
the week. Markets have bottomed, as we enter bullish seasonality.
The Nifty will likely catch up to the upside soon.
The past week saw a big
risk-on move, in which US equity markets rallied hard. Most emerging markets rose,
as interest rates fell. Transports led the move up. The Baltic dry index fell.
The dollar fell. Commodities fell. Valuations continue to be quite expensive,
market breadth rebounded, and the sentiment is still bearish. Fear abated quite
a bit this week, as a possible reality check from a FED Pivot looms.
After this rally, 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
bonds are telegraphing just that. Feels like a 2008-style recession trade has
begun, with a potential for a decline in risk assets across the board. The
current market is tracking closely the 2000 moves down in the
S&P 500, implying a panic low right ahead in the upcoming months (My views
do not matter, kindly pay attention to the levels). A dollar rebound from major
support is a likely catalyst.
The S&P 500 is
encountering resistance near its recent highs. 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, as downward earnings revisions are
underway.
The Fed has aggressively
tightened into a recession. Deflationary busts often begin after major
inflationary scares. The market has rebounded after correcting significantly,
and more is left on the downside. The Dollar, commodities, and bond yields continue to flash major warning signs.
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.
Global yield curves have
inverted significantly reflecting a major upcoming recession. The
recent steepening of the yield curve, within an inverted context, with rates
falling, is a precursor to the next recession, and the riskiest assets will
underperform going forward under such conditions. Looking for
significant underperformance in the Nifty going forward on challenging macros.
The critical levels to
watch for the week are 4370 (up) and 4345 (down) on the S&P 500 and 19300
(up) and 19150 (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 again and will likely prove to be a sell on every rise. Gold
is increasingly looking like the asset class to own over the next decade. (Gold
exploded almost 8 times higher over the decade following the dot-com bust in
2000, just imagine what would happen when this AI bubble bursts? following the
recent crypto bubble burst) You can check out last week’s report for a comparison.
Love your thoughts and feedback.
