Market Signals For The US Stock Market And Indian Stock - Monday, March 23

The S&P and the Nifty collapsed last week. Indicators are bearish for this week. A rally in the S&P is likely soon following the washout though downside risks could push it to 2100. Long term, the epic meltdown is set to continue resulting in a 5 year plus bear market. QE forever from the FED is about to trigger the deflationary collapse of the century and we have made a major top in global equity markets. The market is looking like the short of a lifetime with non-conformations from the transports, other global indices, and commodities. Insane valuations continue. The breakdown in Crude and the Euro was a precursor to a massive drop in the S&P 500. The recent global virus epidemic (black swan) is likely to dent global GDP significantly and usher in a recession much faster than most think. The trend has changed from bullish to bearish and the markets are getting smashed by a strong dollar. Looking for significant underperformance in the Nifty going forward on rapidly deteriorating macros. A 5-year deflationary wave has started in key asset classes like the Euro, stocks, and commodities amidst a number of bearish divergences and overstretched valuations. We are on the verge of a multi-year great depression. The markets are still trading well over 3 standard deviations above their long term averages from which corrections usually result. Tail risk has been very high off late as the yield curve inverts into a recession. The critical levels to watch for the week are 2320 (up) and 2290 (down) on the S&P 500 and 8850 (up) and 8650 (down) on the Nifty. A significant breach of the above levels could trigger the next big move in the above markets. You can check out last week’s report for a comparison. Love your thoughts and feedback.