|
Asset Class |
Weekly Level / Change |
Implication for S & P 500 |
Implication for Nifty* |
|
S & P 500 |
4415, 1.31% |
Bullish |
Bullish |
|
Nifty |
19526, 1.53% |
Neutral ** |
Bullish |
|
China Shanghai Index |
3039, 0.27% |
Neutral |
Neutral |
|
Gold |
1943, -2.83% |
Bearish |
Bearish |
|
WTIC Crude |
77.35, -3.92% |
Bearish |
Bearish |
|
Copper |
3.60, -2.31% |
Bearish |
Bearish |
|
CRB Index |
273, -2.98% |
Bearish |
Bearish |
|
Baltic Dry Index |
1643, 12.38% |
Bullish |
Bullish |
|
Euro |
1.0686, -0.40% |
Neutral |
Neutral |
|
Dollar/Yen |
151.52, 1.44% |
Bullish |
Bullish |
|
Dow Transports |
14427, -0.59% |
Bearish |
Bearish |
|
Corporate Bonds (ETF) |
102.17, 0.26% |
Neutral |
Neutral |
|
High Yield Bonds (ETF) |
90.71, -0.58% |
Bearish |
Bearish |
|
US 10-year Bond Yield |
4.65%, 1.52% |
Bearish |
Bearish |
|
NYSE Summation Index |
-436, 31% |
Bullish |
Neutral |
|
US Vix |
14.17, -4.96% |
Bullish |
Bullish |
|
Skew |
140 |
Bearish |
Bearish |
|
CNN Fear & Greed Index |
Fear |
Bullish |
Bullish |
|
20 DMA, S & P 500 |
4282, Above |
Bullish |
Neutral |
|
50 DMA, S & P 500 |
4338, Above |
Bullish |
Neutral |
|
200 DMA, S & P 500 |
4257, Above |
Bullish |
Neutral |
|
20 DMA, Nifty |
19355, Above |
Neutral |
Bullish |
|
50 DMA, Nifty |
19568, Below |
Neutral |
Bearish |
|
200 DMA, Nifty |
18678, Above |
Neutral |
Bullish |
|
S & P 500 P/E |
24.39 |
Bearish |
Neutral |
|
Nifty P/E |
21.00 |
Neutral |
Bearish |
|
India Vix |
11.35, 4.27% |
Neutral |
Bearish |
|
Dollar/Rupee |
83.33, 0.22% |
Neutral |
Neutral |
|
Overall |
S & P 500 |
Nifty |
|
|
Bullish Indications |
9 |
8 |
|
|
Bearish Indications |
9 |
11 |
|
|
Outlook |
Neutral |
Bearish |
|
|
Observation |
The S&P 500 and the Nifty rose last week. Indicators are mixed for
the week. Markets have put in a short-term bottom and will consolidate at these
levels. Watch those stops. |
||
|
On the Horizon |
US – CPI, PPI, Eurozone – CPI, UK – CPI, Japan – 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 rose last week. Indicators are mixed for
the week. Markets have bottomed in the short-term and are approaching
important resistance levels, as we enter bullish seasonality. We are
transitioning from an inflationary regime to a deflationary collapse.
The Nifty is also bottoming and will likely play catch-up this week.
The past week
saw US equity markets rise. Most emerging markets were unchanged, as interest
rates rose. Transports fell. The Baltic dry index rose. The dollar rose
slightly. Commodities fell. Valuations continue to be quite expensive, market
breadth rebounded, and the sentiment is still bearish. Fear abated 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 are continuing 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 4430 (up) and 4400 (down) on the S&P 500
and 19600 (up) and 19450 (down) on the Nifty. A significant breach of
the above levels could trigger the next big move in the above markets. After
a rebound, 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 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.
