|
Asset Class |
Weekly Level / Change |
Implication for S & P 500 |
Implication for Nifty* |
|
S & P
500 |
5738, 0.22% |
Neutral |
Neutral |
|
Nifty |
25015, -4.45% |
Neutral ** |
Bearish |
|
China
Shanghai Index |
3337, 8.06% |
Bullish |
Bullish |
|
Gold |
2673, 0.19% |
Neutral |
Neutral |
|
WTIC Crude |
74.45, 9.20% |
Bullish |
Bullish |
|
Copper |
4.57, -0.70% |
Bearish |
Bearish |
|
CRB Index |
292, 2.00% |
Bullish |
Bullish |
|
Baltic Dry
Index |
1928, -8.63% |
Bearish |
Bearish |
|
Euro |
1.0976, -1.69% |
Bearish |
Bearish |
|
Dollar/Yen |
148.71, 4.59% |
Bullish |
Bullish |
|
Dow Transports |
15814, -2.30% |
Bearish |
Neutral |
|
Corporate
Bonds (ETF) |
111.52, -1.54% |
Bearish |
Bearish |
|
High Yield
Bonds (ETF) |
96.95, -0.86% |
Bearish |
Bearish |
|
US 10-year
Bond Yield |
3.97%, 5.82% |
Bearish |
Bearish |
|
NYSE
Summation Index |
1037, -6% |
Bearish |
Neutral |
|
US Vix |
19.21, 13.27% |
Bearish |
Neutral |
|
S & P
500 Skew |
156 |
Bearish |
Neutral |
|
CNN Fear
& Greed Index |
Greed |
Bearish |
Neutral |
|
Nifty MMI
Index |
Fear |
Neutral |
Bullish |
|
20 DMA, S
& P 500 |
5667, Above |
Bullish |
Neutral |
|
50 DMA, S
& P 500 |
5554, Above |
Bullish |
Neutral |
|
200 DMA, S
& P 500 |
5254,
Above |
Bullish |
Neutral |
|
20 DMA,
Nifty |
25502, Below |
Neutral |
Bearish |
|
50 DMA,
Nifty |
25033, Below |
Neutral |
Bearish |
|
200 DMA,
Nifty |
23119,
Above |
Neutral |
Bullish |
|
S & P
500 P/E |
30.02 |
Bearish |
Neutral |
|
Nifty P/E |
23.52 |
Neutral |
Bearish |
|
India Vix |
14.13, 18.10% |
Neutral |
Bearish |
|
Dollar/Rupee |
84.03, 0.38% |
Neutral |
Neutral |
|
Overall |
S
& P 500 |
Nifty |
|
|
Bullish
Indications |
7 |
6 |
|
|
Bearish
Indications |
12 |
11 |
|
|
Outlook |
Bearish |
Bearish |
|
|
Observation |
The
S&P was unchanged, and the Nifty fell last week. Indicators are bearish
for the week. Markets
are correcting from resistance. Watch those stops. |
||
|
On
the Horizon |
US – CPI, PPI, UK – GDP, Eurozone – German CPI, India –
RBI rate decision |
||
|
*Nifty |
India’s
Benchmark Stock Market Index |
||
|
Raw Data |
Data courtesy
stockcharts.com, investing.com, multpl.com, nseindia.com, tickertape.in |
||
|
**Neutral |
Changes
less than 0.5% are considered neutral |
The S&P 500 was unchanged, and the Nifty fell last
week. Indicators are bearish for the week. Markets are correcting
from resistance. We are transitioning from an inflationary regime to
a deflationary one. The sentiment is in greed mode, and risk-reward
is poor at these levels. Carry trade liquidation may resume as we enter a
seasonally weak period. The Nifty is correcting from recent highs and will
likely underperform.
The past week saw US equity markets rise. Most emerging markets rose
even as interest rates rose. Transports fell. The Baltic dry index fell. The
dollar rose. Commodities rose. Valuations are expensive, market breadth fell,
and the sentiment is bullish. This week, fear (S&P 500) rose following the FED
Pivot.
After this rally, a currency crisis should resume and push risky
assets to new lows. Despite the recent inflationary spike, deflation is in the
air, 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 correcting from all-time highs. We have bounced
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 as earnings growth peaks. The Fed has aggressively tightened into a recession. Deflationary
busts often begin after major inflationary scares. After correcting
significantly, the market has made new highs, and more is left on the downside.
The Dollar, commodities, and bond yields continue to flash major warning signs.
Global yield curves have steepened after inverting significantly, reflecting a major economic slowdown. 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.
The critical levels to watch for the week are 5750 (up) and 5725
(down) on the S&P 500 and 25100 (up) and 24950 (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
likely be a sell on every rise. Gold increasingly looks like the asset
class (though overextended short-term) to own over the next decade. (Gold
exploded almost eight times higher over the decade following the dot-com bust
in 2000. 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.
