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. We are transitioning from an inflationary regime to a deflationary collapse.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.More By This Author:Market Signals For The U.S. Stock Market And Indian Stock Market – Monday, Oct. 2
Market Signals For The U.S. Stock Market And Indian Stock Market – Monday, Sept. 25
Market Signals For The U.S. Stock Market And Indian Stock Market – Monday, Sept. 18
