Trending
S&P 500 continued reversing the Powell fears after the Swedish nothingburger with barely a consolidation. The consensus is for a very low CPI figure, quite well even undershooting the 6.5% mark. I‘m a bit more wary, and thinking 6.6 – 6.7% is more appropriate, and that the core figure would prove particularly sticky. Enough for the Fed to be unforfortable too, and definitely not give up hiking before Fed funds rate makes it to my (at the moment both realistic and conservative assessment of) 5.50% level – level which the Fed may over time find as not restrictive enough.
Please revisit yesterday‘s article for more CPI game plan thoughts. What‘s worth watching today, is precious metals and yields jubilation as the boat is tilting too much in the way of an unequivocally bullish (risk-on) resolution. Have a look at jubilant cryptos – risk-on is playing a game of chicken with the Fed, running against the proverbial wall. Buy the rumor, sell the news – anyone?
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Let‘s move right into the charts (all courtesy of www.stockcharts.com).
S&P 500 and Nasdaq Outlook
My key "point of control“ level of 3,955 was overcome easily, and the next target of 3,980 came. With barely a trepidation, instead of building a springboard by declining into the CPI announcement, markets just salivate to go up – for 4,010 or higher targets while not looking back to 3,910.
Credit Markets
Bonds closed on a bright note, yet showed more hesitation intraday – and that means stocks are those in the more extended momentary position. Buyer beware, employing a tight stop loss being one fitting idea for today.
Crude Oil
Quoting some of my yesterday‘s words – crude oil stocks will keep doing fine as crude oil gradually recovers. Also when less hawkish Fed thoughts are involved, black gold would like that.
Copper
Copper remains a bright spot, but I‘m still looking for a quick consolidation in the days ahead. Silver and base metals are the best picks, flying out of warehouses no matter the approaching recession.