Market Signals For The U.S. Stock Market And Indian Stock Market

Market Signals For The U.S. Stock Market And Indian Stock Market – Monday, March 11

Mar 11, 2024Jeremy ParkinsonFinance0

The S&P 500 was unchanged and the Nifty rose last week. Indicators are bullish for the week. Markets are topping. We are transitioning from an inflationary regime to a deflationary collapse. The Nifty has started to correct and will likely underperform. We are way overbought short-term and are overdue a pullback here to as low as the 50 DMA soon, as we embrace bearish seasonality.The past week saw US equity markets little changed. Most emerging markets rose, as interest rates fell. Transports fell. The Baltic dry index rose. The dollar fell. Commodities were unchanged. Valuations continue to be quite expensive, market breadth improved, and the sentiment is now exuberant. Fear rose this week, as a possible reality check from an immediate Fed Pivot loom.After this rally, a 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.

Asset Class

Weekly Level / Change

Implication for S&P 500

Implication for Nifty*

S&P 500

5124, -0.26%

Neutral

Nifty

22494, 0.51%

Neutral **

Bullish

China Shanghai Index

3046, 0.63%

Bullish

Gold

2186, 4.32%

Bullish

WTIC Crude

77.85, -2.65%

Bearish

Copper

3.89, 0.76%

Bullish

CRB Index

277, -0.18%

Neutral

Baltic Dry Index

2345, 6.45%

Bullish

Euro

1.0938, 0.93%

Bullish

Dollar/Yen

147.07, -2.03%

Bearish

Dow Transports

15718, -0.72%

Bearish

Corporate Bonds (ETF)

109.02, 1.02%

Bullish

High Yield Bonds (ETF)

94.69, 0.30%

Neutral

US 10-year Bond Yield

4.08%, -2.59%

Bullish

NYSE Summation Index

759, 9%

Bullish

Neutral

US Vix

14.74, 12.43%

Bearish

Skew

141

Bearish

CNN Fear & Greed Index

Greed

Bearish

20 DMA, S&P 500

5061, Above

Bullish

Neutral

50 DMA, S&P 500

4924, Above

Bullish

Neutral

200 DMA, S&P 500

4551, Above

Bullish

Neutral

20 DMA, Nifty

22103, Above

Neutral

Bullish

50 DMA, Nifty

21849, Above

Neutral

Bullish

200 DMA, Nifty

20130, Above

Neutral

Bullish

S&P 500 P/E

27.81

Bearish

Neutral

Nifty P/E

23.22

Neutral

Bearish

India Vix

13.61, -9.20%

Neutral

Bullish

Dollar/Rupee

82.75, -0.11%

Neutral

Overall

S&P 500

Nifty

Bullish Indications

Bearish Indications

Outlook

Bullish

Observation

The S&P was unchanged and the Nifty rose last week. Indicators are bullish for the week.

Markets are topping. Watch those stops.

On the Horizon

Eurozone – German CPI, UK – GDP, US – CPI, PPI, Japan – GDP

*Nifty

India’s Benchmark Stock Market Index

Raw Data

Data courtesy stockcharts.com, investing.com, multpl.com, nseindia.com

**Neutral

Changes less than 0.5% are considered neutral

The S&P 500 is near 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 across the board, as earnings growth peaks.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. The critical levels to watch for the week are 5135 (up) and 5110 (down) on the S&P 500 and 22550 (up) and 22400 (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 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.More By This Author:Market Signals For The U.S. Stock Market And Indian Stock Market – Monday, March 4Market Signals For The U.S. Stock Market And Indian Stock Market – Monday, Feb. 26Market Signals For The U.S. Stock Market And Indian Stock Market – Monday, Feb. 5