The S&P 500 was up and the Nifty was unchanged last week. Indicators are bullish for the week. Markets are topping. We are transitioning from an inflationary regime to a deflationary collapse. We are way overbought short-term and are overdue a pullback here to as low as the 50 DMA, as we embrace bearish seasonality. The Nifty has started to correct and will likely underperform.The past week saw US equity markets rally. Most emerging markets were unchanged, as interest rates fell. Transports rose. The Baltic dry index fell. The dollar rose. Commodities were little changed. Valuations continue to be quite expensive, market breadth improved, and the sentiment is now exuberant. Fear fell 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
5234, 2.29%
Bullish
Bullish
Nifty
22097, 0.33%
Neutral **
Neutral
China Shanghai Index
3048, -0.22%
Neutral
Neutral
Gold
2167, 0.23%
Neutral
Neutral
WTIC Crude
80.82, -0.27%
Neutral
Neutral
Copper
4.00, -3.09%
Bearish
Bearish
CRB Index
286, 0.40%
Neutral
Neutral
Baltic Dry Index
2196, -7.50%
Bearish
Bearish
Euro
1.0807, -0.73%
Bearish
Bearish
Dollar/Yen
151.45, 1.63%
Bullish
Bullish
Dow Transports
16011, 3.31%
Bullish
Bullish
Corporate Bonds (ETF)
108.69, 0.82%
Bullish
Bullish
High Yield Bonds (ETF)
95.13, 0.82%
Bullish
Bullish
US 10-year Bond Yield
4.20%, -2.47%
Bullish
Bullish
NYSE Summation Index
854, 9%
Bullish
Neutral
US Vix
13.06, -9.37%
Bullish
Bullish
Skew
156
Bearish
Bearish
CNN Fear & Greed Index
Greed
Bearish
Bearish
20 DMA, S&P 500
5140, Above
Bullish
Neutral
50 DMA, S&P 500
5010, Above
Bullish
Neutral
200 DMA, S&P 500
4600, Above
Bullish
Neutral
20 DMA, Nifty
22160, Below
Neutral
Bearish
50 DMA, Nifty
21932, Above
Neutral
Bullish
200 DMA, Nifty
20312, Above
Neutral
Bullish
S&P 500 P/E
28.41
Bearish
Neutral
Nifty P/E
22.81
Neutral
Bearish
India Vix
12.22, -10.74%
Neutral
Bullish
Dollar/Rupee
83.62, 0.89%
Neutral
Bearish
Overall
S&P 500
Nifty
Bullish Indications
11
10
Bearish Indications
6
8
Outlook
Bullish
Bullish
Observation
The S&P was up while the Nifty was unchanged last week. Indicators are bullish for the week.
Markets are topping. Watch those stops.
On the Horizon
UK – GDP, US – GDP, Japan – CPI
*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.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 5245 (up) and 5220 (down) on the S&P 500 and 22200 (up) and 22000 (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 11
Market Signals For The U.S. Stock Market And Indian Stock Market – Monday, March 4
Market Signals For The U.S. Stock Market And Indian Stock Market – Monday, Feb. 26
