Market Signals For The US Stock Market And Indian Stock - Monday, June 1

The S&P 500 and the Nifty rallied last week. Indicators are bullish for the coming week. It’s back to mid Feb euphoria for the indices and a March style repeat awaits. The markets are very close to an epic melt down and the SPX is headed to 1800 in the medium term. It is 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 maybe as low as 800 on the S&P. 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 life time with non-conformations from the transports, other global indices and commodities. High valuations continue. The breakdown in Crude and the Euro is a precursor to yet another 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 depression 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 under performance 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 over stretched valuations. We are entering 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 3060 (up) and 3030 (down) on the S&P 500 and 9650 (up) and 9500 (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.

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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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