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S&P 500 didn‘t produce a dead cat bounce to speak of Monday, and today‘s overnight resilience on ORCL earnings allows the bulls derisking into CPI, which is likely to come at least as hot as predicted – please see extensive Sunday article fore more.
The performance within semiconductors and Bitcoin miners is especially troubling, and rotations would provide very limited protection as ES and IWM show.
Way more details follow in the stock market commentary that I‘m releasing today freely.
Let‘s move right into the charts (all courtesy of www.stockcharts.com) – today‘s full scale article contains 3 of them, featuring S&P 500, precious metals and oil.
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S&P 500 and Nasdaq Outlook
Within Sunday‘s analysis, I wrote this about supports:
(…) 5,115 though remained out of reach, but may get tested if the short-term tech situation doesn‘t stabilize Monday – and it is probably too early for that.
Watch Bitcoin for extra clues – erasing still bearish leaning Saturday trading via a Sunday gain of +$1K, then going to almost touch $70K again before retreating $500, would mark another win of greed over fear if the bullish turn holds, and buying the dip could spread through the Asian session – still a question mark over that.
5,088 though seems too far in the nearest days ahead for a drop – tech panic which is by the way already being bought by strong hands, would have to spread somewhat to cyclicals, and given Russell 2000 performance almost decoupling, I don‘t see such a drop as likely till CPI decision time, which would have to come in hotter than I expect it to.
Look how well markets took hot NFPs, preceding core PCE data – sudden rush to the exit door a la NYCB hit or crypto Friday fear, appear more powerful as catalysts given the overall greed phase and existing negative divergencies.
Big picture, this is a welcome short-term consolidation within a still bullish market – one that is probing where the support emerges, and odds are it would be higher than before Powell.
Today though, I‘m looking for way more action in the 5,115 area, and for the sellers to have generally upper hand right next. The CPI risks are skewed too much the disinflation way, which would provide more selling volume. Even quality names such as DELL couldn‘t rebound, and coupled with SMH not done correcting, this spells danger for risk taking immediately next.