All is not Well with Global Financial Markets

It does appear that all is not as rosy as it used to be in the global financial market landscape:

First and foremost global shipping activity appears to have come to a screeching halt, as pointed out by Jeff Berwick via the Market Oracle and this likely has recessionary implications:

Secondly when a single bank's derivative exposure exceeds the GDP of a country or region you know you are bound to have problems as ETF daily news rightly points out the case of Deutsche Bank:

Thirdly as QuandaryFX points out via Seeking Alpha the S & P 500 starts turning down when manufacturing starts to turn down like we are seeing off late:

Last but not the least the Safehaven plunge into Gold,Treasuries & the Japanese yen is clearly taking hold as pointed out by Chris Vermeulen via CNA Finance:

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning February 15

Indicator	Weekly Level / Change / Significance	Implication for S & P 500	Implication for Nifty*
S & P 500	1865, -0.810%	Bearish	Bearish
Nifty	6981, -6.79%	Neutral**	Bearish
China Shanghai Index	2764, 0.00%	Neutral	Neutral
Gold	1239, 5.49%	Bullish	Bullish
WTIC Crude	29.02, -6.39%	Bearish	Bearish
Copper	2.03, -2.68%	Bearish	Bearish
Baltic Dry Index	291, -2.02%	Bearish	Bearish
Euro	1.132, 1.49%	Bullish	Bullish
Dollar/Yen	113.27, -3.10%	Bearish	Bearish
Dow Transports	7049, 1.52%	Bullish	Bullish
High Yield (ETF)	32.00, -0.93%	Bearish	Bearish
US 10 year Bond Yield	1.75%, -5.41%	Bullish	Bullish
Nyse Summation Index	-668, -19.37%	Bearish	Neutral
US Vix	25.40, 8.64%	Bearish	Bearish
20 DMA, S and P 500	1885, Below	Bearish	Neutral
50 DMA, S and P 500	1967, Below	Bearish	Neutral
200 DMA, S and P 500	2034, Below	Bearish	Neutral
20 DMA, Nifty	7361, Below	Neutral	Bearish
50 DMA, Nifty	7592, Below	Neutral	Bearish
200 DMA, Nifty	8028, Below	Neutral	Bearish
India Vix	24.67, 36.20%	Neutral	Bearish
Dollar/Rupee	68.12, 0.35%	Neutral	Neutral
Overall	S & P 500	Nifty
Bullish Indications	4	4
Bearish Indications	11	12
Outlook	Bearish	Bearish
Observation	The S and P 500 and the Nifty fell hard last week. Indicators are bearish. Market is oversold. A short term tradeable bottom may emerge soon.
On the Horizon	China - CPI, Japan – GDP, Euro zone – ZEW survey, U.K – CPI, U.S – CPI, Canada – CPI, Australia – Employment data
*Nifty	India’s Benchmark Stock Market Index
Raw Data	Courtesy Google finance, Stock charts, FXCM
**Neutral	Changes less than 0.5% are considered neutral

The US market and Nifty fell last week. Signals are bearish for the upcoming week. The markets are in oversold mode and are gearing up for another bounce, looking for a short term bottom to emerge soon near the 1800 mark on the S & P. The multi week up move in the transports is indicating a bounce maybe forth coming. The critical levels to watch are 1880 (up) and 1840 (down) on the S & P and 7000 (up) and 6800 (down) on the Nifty. A significant breach of the above levels could trigger the next big move in the above markets. You can check out last week’s report for a comparison. You can also check out snapshots of the S and P 500 and Nifty Indices. Love your thoughts and feedback.

A Comparison of Current US Stock Market Performance to that in 2008 and 2000

A look back at stock market performance in two major bear market years of 2000 & 2008 reveals some interesting findings:

First lets look at the S & P 500 Chart in 2000:

The market dropped 10% to start the year. It proceeded to recover most of its losses by late March failing at prior highs eventually falling over 15% further post August. 

Next lets look at the S & P 500 Chart in 2008:

The market again dropped 10% to start the year. It proceeded to recover most of its losses by early May and then collapsing over 50% into October.

That brings us to Today's market:

We have again dropped 10% to start the year.  If we go by what the market did in 2000 and 2008 we should recover most of these losses by May and then begin a major collapse in the fall ahead of the US elections and into 2017.