S&P 500 declined, with tech holding up best – the volatility spike is here as real economy deceleration is joined by Evergrande fears. Both paper and real assets took it on the chin, and yields together with the dollar rose. As for greenback and Treasuries upcoming price path:
Gates Capital Management's ECF Value Funds have a fantastic track record. The funds (full-name Excess Cash Flow Value Funds), which invest in an event-driven equity and credit strategy, have produced a 12.6% annualised return over the past 26 years. The funds added 7.7% overall in the second half of 2022, outperforming the 3.4% return for Read More
(…) Treasury yields moved up, but don‘t expect to see them gallop just yet. Slow and steady, orderly grind higher is the most likely trajectory ahead, and even that won‘t propel the dollar higher, or keep it really afloat. Greenback‘s support is at 91.70, and I‘m looking for it to give in over the nearest weeks, which carries tremendous implications for commodity and precious metals trades. And for risk assets in general.
Precious metals, copper and oil bore the brunt of souring sentiment, with cryptocurrencies joining in the slide later through the day. But have the material facts changed, or all we got was a whiff of risk-off? September is likely to be volatile, it seasonally is, and August had been a surprisingly calm month. You know what they say about periods of lower volatility giving way to those of higher readings… Time to buckle up.
Let‘s move right into the charts (all courtesy of www.stockcharts.com).
S&P 500 and Nasdaq Outlook
The S&P 500 downswing was a value driven one. Risk-on has to wait for now.
Credit market slide would have to stop before the stock market bulls can think about recovery – yesterday‘s picture gives a daily scare impression.
Gold, Silver and Miners
Higher yields and rush into the dollar did hurt precious metals, but I‘m not looking for a fresh and steep downleg to be starting here. When the momentary sense of panic calms down (it can happen relatively fast), precious metals would have an easier time rising on the monetary policy and inflation projections.
Crude oil ran into another setback, but the buying interest bodes well – I‘m looking for a gradual price recovery to continue.
While copper is hurt by the weakening real economy and underperforming the CRB Index, commodities haven‘t rolled over to the downside – the commodities superbull remains intact. Copper bulls are bidding their time, and would likely step in on the heels of positive news out of China.
Bitcoin and Ethereum
Bitcoin looks to have found a temporary floor, but it would be very premature to declare a fresh upswing to be about to start – medium-term chart damage has been done.
Yesterday‘s risk-off day is likely to get at least partially reversed today, and I‘m not looking for it to break the stock market and commodity bull runs. As for precious metals and cryptos, I‘m looking for their recovery to start in earnest once the dollar and yields once again paint a favorable picture.
Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
Stock Trading Signals
Gold Trading Signals
Oil Trading Signals
Copper Trading Signals
Bitcoin Trading Signals
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.