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S&P 500 was stumbling at the open, thanks to tech sellers. Over first two hours though, market breadth increasingly established itself as broad. Followed by a daily short squeeze when even healthcare closed almost neutral. Notably, tech, communications and discretionaries overshaxdowed materials, industrials with energy, and financials up by 0.80% means that the bias for much of this week, is to go higher in stocks. Overnight shallow consolidation to give room to grind up this week at least.
Even if TGA is being replenished and ECB expresses concern about skier than thought core inflation, today‘s inflation undershoot surprise from Australia adds to the picture of central banks willing to err on the side of caution. Also, current data (yesterday is a good example) haven‘t sunk the notion that the worst is over and recession won‘t arrive.
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Let‘s move right into the charts (all courtesy of www.stockcharts.com) – today‘s full scale article contains 5 of them.
S&P 500 and Nasdaq Outlook
4,415 was taken on, and odds are the buyers would overcome this level later today or premarket tomorrow. 4,385 unlikely to come into jeopardy – rather I‘m eyeing 4,425 area to eventually give. As I had been mentioning in the daily analyses and video, AAPL and META have to cooperate, which they did not yesterday, and China chip considerations aren‘t probably enough to affect much more than perhaps NVDA today.
This breadth chart looks unlikely to reverse much either today or tomorrow. Similarly, yesterday‘s tech advance wouldn‘t be sold into this soon again either. Sideways to up is the favored short-term direction.
Disinflation with tightening is bearish commodities and real assets in general, so the medium-term outlook is a bearish oue. I can‘t say this loudly enough – and it’s not the first time I’ve said so.
Related: Bull Trap or a Bull Market?