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, July 1

Jul 01, 2024Jeremy ParkinsonFinance0

The S&P 500 was unchanged and the Nifty was up last week. Indicators are mixed for the week. Markets are at resistance near all-time highs among glaring divergences. We are transitioning from an inflationary regime to a deflationary collapse. The markets are at new highs and risk-reward is poor at these levels. The Nifty is also at new highs and will likely underperform.The past week saw US equity markets little changed. Most emerging markets were unchanged, even as interest rates rose. Transports rose. The Baltic dry index rose. The dollar was unchanged. Commodities fell. Valuations continue to be quite expensive, market breadth declined, and the sentiment is now bearish. Fear (S&P 500) abated this week, as a possible reality check from a 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

5461, -0.08%

Neutral

Nifty

24011, 2.17%

Neutral **

Bullish

China Shanghai Index

2967, -1.03%

Bearish

Gold

2337, 0.36%

Neutral

WTIC Crude

81.46, 0.90%

Bullish

Copper

4.37, -1.21%

Bearish

CRB Index

291, -0.94%

Bearish

Baltic Dry Index

2050, 2.65%

Bullish

Euro

1.0715, 0.22%

Neutral

Dollar/Yen

160.85, 0.66%

Bullish

Dow Transports

15415, 2.00%

Bullish

Neutral

Corporate Bonds (ETF)

107.12, -0.92%

Bearish

High Yield Bonds (ETF)

94.27, -0.32%

Neutral

US 10-year Bond Yield

4.39%, 3.21%

Bearish

NYSE Summation Index

152, -16%

Bearish

Neutral

US Vix

12.44, -5.76%

Bullish

Neutral

S&P 500 Skew

142

Bearish

Neutral

CNN Fear & Greed Index

Fear

Bullish

Neutral

Nifty MMI Index

Extreme Greed

Neutral

Bearish

20 DMA, S&P 500

5408, Above

Bullish

Neutral

50 DMA, S&P 500

5270, Above

Bullish

Neutral

200 DMA, S&P 500

4866, Above

Bullish

Neutral

20 DMA, Nifty

23322, Above

Neutral

Bullish

50 DMA, Nifty

22795, Above

Neutral

Bullish

200 DMA, Nifty

21401, Above

Neutral

Bullish

S&P 500 P/E

28.38

Bearish

Neutral

Nifty P/E

22.85

Neutral

Bearish

India Vix

13.80, 4.72%

Neutral

Bearish

Dollar/Rupee

83.38, -0.22%

Neutral

Overall

S&P 500

Nifty

Bullish Indications

Bearish Indications

Outlook

Bullish

Bearish

Observation

The S&P was unchanged and the Nifty was up last week. Indicators are mixed for the week.

Markets are at resistance among glaring divergences. Watch those stops.

On the Horizon

US – Employment data, Eurozone – German CPI, CPI

*Nifty

India’s Benchmark Stock Market Index

Raw Data

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

**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 continue 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 5475 (up) and 5450 (down) on the S&P 500 and 24100 (up) and 23900 (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, (though overextended short-term) 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, June 24Market Signals For The U.S. Stock Market And Indian Stock Market – Monday, June 17Market Signals For The U.S. Stock Market And Indian Stock Market – Monday, June 10