|
Asset Class
|
Weekly Level / Change
|
Implication for S & P
500
|
Implication
for Nifty*
|
|
S & P 500
|
4410, 2.58%
|
Bullish
|
Bullish
|
|
Nifty
|
18826, 1.41%
|
Neutral **
|
Bullish
|
|
China Shanghai Index
|
3273, 1.30%
|
Bullish
|
Bullish
|
|
Gold
|
1971, -0.34%
|
Neutral
|
Neutral
|
|
WTIC Crude
|
71.44, 1.81%
|
Bullish
|
Bullish
|
|
Copper
|
3.88, 2.39%
|
Bullish
|
Bullish
|
|
CRB Index
|
271, 3.98%
|
Bullish
|
Bullish
|
|
Baltic Dry Index
|
1094, 3.94%
|
Bullish
|
Bullish
|
|
Euro
|
1.0943, 1.82%
|
Bullish
|
Bullish
|
|
Dollar/Yen
|
141.85, 1.80%
|
Bullish
|
Bullish
|
|
Dow Transports
|
14793, 3.86%
|
Bullish
|
Bullish
|
|
Corporate Bonds (ETF)
|
107.69, 0.87%
|
Bullish
|
Bullish
|
|
High Yield Bonds (ETF)
|
91.91, 0.34%
|
Neutral
|
Neutral
|
|
US 10-year Bond Yield
|
3.77%, 0.63%
|
Bearish
|
Bearish
|
|
NYSE Summation Index
|
219, 288%
|
Bullish
|
Neutral
|
|
US Vix
|
13.54, -2.10%
|
Bullish
|
Bullish
|
|
Skew
|
143
|
Bearish
|
Bearish
|
|
CNN Fear & Greed
Index
|
Extreme Greed
|
Bearish
|
Bearish
|
|
20 DMA, S & P 500
|
4261, Above
|
Bullish
|
Neutral
|
|
50 DMA, S & P 500
|
4181, Above
|
Bullish
|
Neutral
|
|
200 DMA, S & P 500
|
3984, Above
|
Bullish
|
Neutral
|
|
20 DMA, Nifty
|
18563, Above
|
Neutral
|
Bullish
|
|
50 DMA, Nifty
|
18203, Above
|
Neutral
|
Bullish
|
|
200 DMA, Nifty
|
17898, Above
|
Neutral
|
Bullish
|
|
S & P 500 P/E
|
25.53
|
Bearish
|
Neutral
|
|
Nifty P/E
|
21.92
|
Neutral
|
Bearish
|
|
India Vix
|
10.84, -2.52%
|
Neutral
|
Bullish
|
|
Dollar/Rupee
|
81.90, -0.65%
|
Neutral
|
Bullish
|
|
Overall
|
S & P 500
|
Nifty
|
|
|
Bullish Indications
|
15
|
17
|
|
|
Bearish Indications
|
4
|
4
|
|
|
Outlook
|
Bullish
|
Bullish
|
|
|
Observation
|
The S&P 500 and the Nifty rose last week. Indicators are bullish
for the week.
The markets have gone
parabolic. Watch those stops.
|
|
|
|
On the Horizon
|
UK – CPI,
BOE 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&P
500 and the Nifty rose last week. Indicators are bullish for the
week. We are near recent highs on the S&P 500, as we transition from
an inflationary regime to a deflationary collapse. The Nifty is also
close to its recent highs.
The past week
saw US equity markets rise. Most emerging markets rose, as interest rates rose
slightly. Transports rose. The Baltic dry rose. The dollar fell. Commodities rose.
Valuations continue to be quite expensive, market breadth rose, and the
sentiment is now extremely bullish. Fear has collapsed, as a possible reality
check from a FED Pivot looms.
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.
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 3600 area is emerging on the
S&P 500, and 16000 should arrive on the Nifty in the next few months.
The trend has
changed from bullish to bearish and markets risk getting a reality check and
smashed by contagion risk from an economic slowdown and a strong dollar. 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 most risky 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 4425 (up) and 4395 (down) on the S&P 500
and 18900 (up) and 18750 (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 over the next decade (Gold exploded almost
8 times higher following the dotcom 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.
