Defying Powell Makes S&P 500 Slide

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S&P 500 did that shalow correction yesterday, and continued higher. It wasn‘t about sectors yesterday, but about bonds. Going from strength to strength (doubting Powell), they made the daily correction prospects unlikely also for today premarket, which drove me to keep the profitable long intraday call of yesterday intact.

That‘s the advantage of combining swing trading (where one waits for whether the rebound fizzling out on tech thesis gets validated, and hence tightens stop-loss to protect existing gains) with intraday one – diversification while the daily stock market outlook leans gently bullish still for today unless tech finds a solid floor soon.

It‘s that tech, communications and discretionaries aren‘t likely to undewhelm today, and yesterday‘s hesitation in market breadth would be reversed over the coming days. Thus far, there is no bearish divergence or similar that would trigger a broad sell, and upcoming economic data in unemployment and housing are likely to support the temporary notion that recession has been avoided.

Meanwhile, market would get to discount 2 more rate hikes this year as per Powell‘s yesterday‘s words – all at a time when owners‘ equivalent rent inflation is going to mathematically slow down thanks to base effect and decelerating momentum, all reflecting recent liquidity constraints.

This discounting is looking quite volatile, as liquidity realizations strike.

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Let‘s move right into the charts (all courtesy of www.stockcharts.com) – today‘s full scale article contains 5 of them.

S&P 500 and Nasdaq Outlook

S&P 500

4,415 as a support will likely hold today (withstanding the rise in yields on more Fed tightening bets), and somewhat already at 4,425 would be defended too – once tech recovers from more hikes getting factored in (should happen before the close, at least to the degree of laying down foundations for more tech dip buying on volatility crush Friday).

4,455 is where futures would face solid resistance, but that‘s not a story for today or tomorrow. The name of the game is recovering yet again from hawkish Fed realization (keeping above 4,415) – and the liquidity worries hitting broadly across assets such as gold and silver..

market breadth

Just how much gets the hawkish Fed realization bought, remains to be seen. Similarly the only open question for today is, where would be the pockets of strength sectorally, and the degree of tech slide.

Gold, Silver and Miners

Gold

Miners are leading lower, and precious metals remain vulnerable to consolidation with a bearish bias here and there, peppered with a slide. The more so the dollar is underpinned by the Fed, the more would gold with silver keep struggling. The correction isn‘t ending this week or next. $1,890s and $22.20 – $22.40 are ahead.

Crude Oil

Crude Oil

Crude oil is getting saved by the Saudi production cut taking effect within days, and black gold will spend more time in the $70 area, lacking clear direction.

Copper has reached $3.72, and may revisit $3.63 support area.

As stated yesterday, disinflation with tightening is bearish commodities and real assets in general, so the medium-term outlook is a bearish oue. I can‘t say this loudly enough.

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All essays, research and information represent analyses and opinions of Monica Kingsley that are based on available and latest data. Despite careful research and best efforts, it may prove wrong and be subject to change with or without notice.

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