Market Signals For The US Stock Market And Indian Stock Market - Monday, June 7

The S&P 500 and the Nifty rallied last week. Indicators are bullish for the week. Earnings growth in the recent quarter has been very good but it is already in the price. Typical late-cycle Fed put stuff is leading to an imminent top. The market is on the verge of an epic correction. Deflationary busts often begin after inflationary scares (the market is calling the Fed’s bluff) and gold is telegraphing just that. Transports and the skew are flashing early warning signs. The epic crash signal is alive and well with retail, hedge funds, and speculators all in, despite the recent melt-up and break out of the long-term broadening top, suggesting a major top is imminent. The moment of reckoning is very near.  Technicals are about to track fundamentals and turn bearish. The market is yet to price in one of the worst earnings decline periods in stock market history. With extremely high valuations, a crash is on the menu. Extremely low volatility suggests complacency and downside ahead.

We rallied 46% right after the great depressions (1930’s) first collapse and we have rallied over 80% in our most recent rally of the lows in the last 12 month period. After extreme euphoria for the indices, a highly probable selloff to the 3000 area is emerging on the S&P, and 10000 should arrive on the Nifty in the next few months. The Fed is repeating the Japan experiment and the 3 lost decades in Japan (1989-2019) is set to repeat across the globe. SPX 1500 and lower in a year and we stay there till 2030, scary? The markets are very close to an epic meltdown and the SPX is headed way lower.

The markets are overvalued, overbought and out of touch with economic realities. Long term, the epic meltdown is set to continue resulting in a 5 year plus bear market with lot lower levels may be as low as 800 on the S&P. QE forever from the Fed is about to trigger the deflationary collapse of the century as we make a major top in global equity markets. The market is looking like the short of a lifetime with topping action in the transports, other global indices, and commodities. High valuations continue.

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Disclaimer: The views expressed here are my own and must not be taken as advice to buy or sell securities.

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