S&P 500 rally fizzled out overnight as stagflation worries are gaining firmer ground. The focus shifted to more Chinese property developers, and German factory orders drop was larger than expected – and at the same time, both inflation and inflation expectations keep rising.
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VIX indeed hasn‘t declined below 21, and today‘s session has bearish understones again. The cynics could ask how long before the Fed rides to Treasuries rescue, breaking the dollar upswing (not that signs of its weakening wouldn‘t be there), which would help stocks crawl back somewhat? Tech already defied rising yields yesterday, but can its upswing stick?
Not too likely, for there is a shift happening, and that merits attention of commodities, PMs and crypto investors. The paper asset bears have the advantage while inflation is getting increasingly a recognized issue, underpinning real assets and cryptocurrencies.
Let‘s move right into the charts (all courtesy of www.stockcharts.com).
S&P 500 and Nasdaq Outlook
S&P 500 volume doesn‘t confirm the upswing‘s strength.
HYG holding up better could be interpreted as mildly risk-on, but given the bond market sentiment, it remains suspect.
Gold, Silver and Miners
Gold and silver are feeling the heat of rising rates / underpinned dollar, but notice that the bears have a harder and harder time to drive down these paper prices.
Crude oil ascent is approaching $80 resistance, and will likely back and fill before taking up on this level. Given the celebrations in oil stocks, this time is approaching.
Copper keeps struggling in spite of broader commodities strength – the red metal is bidding its time.
Bitcoin and Ethereum
Bitcoin and Ethereum keep consolidating gained ground, and the bears are likely to make a very temporary appearance.
Stock market bears continue having the upper hand, and credit markets are thinking twice about every upswing. As the stagflationary atmosphere intensifies, look for the commodities to do much better than stocks or bonds, and for precious metals to join once the Fed wobbles again, or sees its bluff called.
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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. Monica Kingsley does not guarantee the accuracy or thoroughness of the data or information reported. Her content serves educational purposes and should not be relied upon as advice or construed as providing recommendations of any kind. Futures, stocks and options are financial instruments not suitable for every investor. Please be advised that you invest at your own risk. Monica Kingsley is not a Registered Securities Advisor. By reading her writings, you agree that she will not be held responsible or liable for any decisions you make. Investing, trading and speculating in financial markets may involve high risk of loss. Monica Kingsley may have a short or long position in any securities, including those mentioned in her writings, and may make additional purchases and/or sales of those securities without notice.