SPX backing and filling worthy of Monday’s session – with major rotations below the surface. Tech and Nasdaq were consolidating on a daily basis as long-term government bonds pulled back a little. The bottom line, however, was the rejection of the intraday downside potential, which would make the S&P 500 pendulum more bullish this week. The VIX spike was rejected while options traders did not give up much of their bearish determination, but that does not detract from the bullish picture.
Yesterday’s stock trading was accompanied by a decline in bond markets. Such non-confirmation is encouraging in its ramifications as markets still take the temporary inflation news seriously, given the less alarming nature of Thursday’s PPI. It seems like we are in for a few relatively stable weeks with government bond yields falling short of inflation expectations before the rise in yields returns:
(…) The transitory inflation story has been modestly supported, but while I think the blistering CPI inflation would ease a bit once year over year (i.e. not always rise as much as it did with Wednesday’s data) to Compare this Against normalization, a permanently elevated plateau of high and rising inflation would be a reality for more than the foreseeable future, simply because the Fed would lag behind just like Arthur Burns in the fight against inflation in the 1970s, and price pressures on the labor market would rise .
Given the vast scale of money pressures and injections that the bond guards certainly have in their graves, it is a wonder the bond markets are no longer, much more indignant. Okay, so you can assume that 10-year government bond yields have more than tripled since August, but the low base (0.5%) skewed the view. Lots of room before the financial repression becomes even more prominent (we’re nowhere near the panic returns that are causing real trouble for the S&P 500) but we have time – I’m looking for a respite in the Treasuries markets that would especially help the recovery of the technology sector.
The final sign of encouragement for the S&P 500 bulls comes from Russell 2000 and the emerging markets, which had a better day than the 500-strong index. At the same time, the dollar questioned and is likely to break below its May lows, in line with my bearish dollar claims.
Gold and silver fireworks continue, and the miners support these movements – including the silver fireworks that come to life. As I said a month ago, the inevitable inflation data is lowering real interest rates and it is at work. What started as the decoupling from rising nominal yields that I talked about in early March continues on a more obvious day. to greatly increase my open gold profits.
The upswing in crude oil is on track, and the lower volume is not so worrying that it will be invalidated. It is crucial that the oil sector ($ XOI) continues to move forward and continues to fully support the development of the oil sector open oil position even more profitable.
Bitcoin and Ethereum rebounded from their daily low yesterday and despite the choppy trading throughout the session The Ethereum position was closed at a profit. Bitcoin doesn’t seem out of the woods yet, but the Ethereum chart looks more constructive over time.
Let’s go straight to the charts.
S&P 500 outlook
The bullish consolidation of the S&P 500 continues and bulls are still the favored party amid today’s sideways trading.
Corporate bonds – whether high yielding or investment grade – did not match the daily resilience of equity markets and followed long-term government bonds on the downside. However, such action appears to be a daily fluctuation and is not good enough to reassess the bullish outlook.
Technology and value
$ NYFANG did not participate in the daily tech setback while its value, which was largely held, gained ground. The technology looks like it is ready for the rally to continue, which would go well with the relative calm in the treasury market.
Gold, silver and miners
Gold and miners are gaining speed, especially the latter – and that’s a good sign for the former, which of course also extend in silver. Please note that this is happening against the background of slightly rising nominal interest rates (see my earlier words on the increasingly obvious decoupling).
Silver confirms and so does the ratio of copper to 10 years. Just as I spoke on May 6th, precious metals are taking over the baton of raw materials – they are catching up.
Crude oil is back in growth mode, but the lower daily volume advises patience and may also indicate less volatile trading on the day ahead (today). In either case, I am not looking for a sharp reversal in the downward movements.
S&P 500 bulls prepare for further progress amid all the support and fill unless corporate credit markets throw a seizure. However, it is unlikely to be of permanent concern.
The upswing in gold, silver and miners is in full swing. So take a look, as higher prices are imminent.
Crude oil is another bullish bet and its chart and oil index performance is still supporting higher prices.
The problems with Bitcoin continue and Ethereum is in a better position to return to growth sooner. At the moment, however, not everything seems to be calm in Kryptoland.