S&P 500 buyers weren‘t really present yesterday, and the session finally finished on a strong, one-sided bearish note with all four conditions of mine (linked to) met. Dr copper was simply right in foretelling a down day yesterday. The many bearish medium-term signs described in latest extensive analyses, are raising their heads.
Aftermarket didn‘t bring any retracement attempt to speak of – instead, sellers retook initiative, and 4,154 turned into resistance. Also real assets confirm this is still a risk-off environment as illustrated by TLT jump higher.
Last but not least, UK inflation data isn‘t an isolated occurence of persistent core figures – US stocks still have to tackle the Fed tightening with lengthy pause vs. easing disconnect, onset of a genuine recession in Q3, LEIs declining for 13 months in a row, shrinking M2, deposits outflow hampering commercial lending, approaching real estate downward path continuation while unemployment claims pick up and Treasury starts issuing fresh debt to replenish TGA. Hardly a bullish cocktail.
Don‘t forget NVIDIA Corporation (NASDAQ:NVDA) earnings and the highly likely disappointment not living up to the AI hype and chase.
Quoting from yesterday‘s long analysis:
(…) Big Tech is ignoring the glaring disconnect to TLT – these two usually go hand in hand, but GOOGL, MSFT and AAPL with NVDA are still holding up. Talking the last two, there is some short-term technical vulnerability (as in suspect series of latest daily candles) showing up, and I wonder how much more nosebleed for NVDA can come following its earnings tomorrow after the close.
Today is shaping up on a risk-off note, reflecting the poor European manufacturing data that has already pushed many real assets towards my corrective targets. Meanwhile, the long-dated Treasuries outlook is going to change in the following weeks – the run higher will be though more muted than otherwise would have been thanks to the Fed no longer being the buyer, and Treasury General Account replenisment needs following debt ceiling resolution, which would work to suck some liquidity off the market place.
Recession is to start in Q3, and the consumer is getting increasingly into hot water. With household debt over $17T, credit card debt not really retreating (revolving credit up 17% in Mar annualized), the stress is showing in XRT and recent earnings calls from WMT, TGT… leaving AMZN not immune either, methinks.
Don‘t forget that the LEIs I mention so often, have been declining for 13 months in a row, and show no sign of turning. Fed isn‘t happy about the GDP, real estate or job market status as relates its larger inflation ight. Stock market sellers are to retake initiative once this rally runs its course.
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Let‘s move right into the charts (all courtesy of www.stockcharts.com) – today‘s full scale article contains 4 of them.
S&P 500 and Nasdaq Outlook
4,154 is now resistance, ideally to hold on the closing basis. Dip buying is though to emerge first – bulls aren‘t going to give up without any intraday fight, even on no debt ceiling positive news. 4,136 breach followed by 4,115 are the key objectives, reaching which would take a while, and perhaps also Friday‘s core PCE coming in at least 0.3%. More banking sector, industrials, materials, retail and smallcaps weakness is essential.
Gold, Silver and Miners
Gold repelled the immediate danger of $1,930 and so did silver regarding $23.15. Next weeks would show whether these come into jeopardy again, or not – this week‘s lows are in.
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