Let’s move right into the charts (all courtesy of www.stockcharts.com).
S&P 500 and Nasdaq Outlook
S&P 500 And NASDAQ Combined Chart.
The tightly tracking each other indices – S&P 500 and Nasdaq 100 – are likely to part ways to a degree soon. As Treasury yields made a double bottom, look for more tech to give way to cyclicals as they come back. Inflation, reopening trades and interest-rate sensitive spreads (e.g. financials over utilities) should start doing better.
HYG, LQD And TLT Combined Chart.
High-yield corporate bonds resilience is a good sign, and credit spreads likely to start widening again would confirm the continued, albeit questioned, economic expansion. It is not hiccup-free, but still continuing – unless the Fed tightens prematurely and too much. The market isn’t worried about that at the moment.
Gold, Silver and Miners
Gold, HUI And TLT Combined Chart.
Grim price action in the metals, and more is yet to come (looking at overnight price action). Gold and silver usually do better once the waiting for taper is over. The Bernanke experience is the right one to compare taper prospects to, but the Fed will have a much harder time mopping up the excess liquidity than it did in 2018. Commercial bank credit creation isn’t still there to make up for lost central bank purchases. Gold is getting scared even as inflation isn’t showing signs of retreating and real rates remain deeply negative. Only inflation expectations have been jawboned. As neither the miners-to-gold ratio nor TIPS signal panic, the only question is when the metals would stabilize and whether a fresh washout would occur or not. My view is that we’re way closer to the pain’s end.
WTI And XOI Combined Chart.
Oil staged another reversal, and it was intraday to the downside. How credible is that? Again, trading within the $60-$80 range, I’m of the opinion that prices are interesting to the buyers here, as black gold got caught in the taper fears selloff just as gold, silver or copper did. Oil demand may be also coming under pressure due to all the restrictions even though APT doesn’t signal its sharply rising odds (yet).
Copper retreated from its promising upswing, but its indicators are slowly turning positive. While it has mirrored the yields compression (signs of weakening growth/growth worries), it looks ready to gradually come back to life and play catch up with the commodity index.
Bitcoin And Ethereum
Bitcoin And Ethereum Combined Chart.
Resolute downswing rejection of Sunday’s retracement in both Ethereum and Bitcoin. The bulls are on the march still. Cryptos have turned the corner very indeed. With so much bearish sentiment out there, the dips might be short-lasting and shallow.
Will Gold And Silver Massacre Continue?
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