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S&P 500 prompt recovery confirms my bullish run thesis – above 4,520, and given my Feb announced year end target of 4,700, fresh ATHs are approaching. Get ready though for quite some volatility as the current lull won‘t last indefinitely – I‘m not looking for VIX at 15 to be broken to the downside on a closing basis, and wouldn‘t be surprised by another noticeable correction once the current upswing runs out of steam somewhat above prior ATHs.
So far so good, and the stock market run continues without marked credit markets confirmation as the risk-on turn there isn‘t complete (yet). Treasury yields aren‘t retreating, yet tech is the driver of the S&P 500 upswing while value keeps treading water. Encouragingly, financials do well – it‘s cyclicals‘ time, and the open S&P 500 long position is very solidly profitable already.
Commodities upswing continues, and precious metals (silver leading gold), are in the tow. Less so when it comes to silver, which is inspired by the great copper run. As if indeed silver was sniffing the copper awakening soon – strong copper long profits keep growing too. Crude oil refused to yield much ground, and any timid intraday move down, gets swiftly bought. Similarly cryptos aren‘t looking back.
And at the same time, the dollar keeps trading on a high ground, only today yielding some 0.30 points. What gives? It‘s my view that not even the yields drifting slowly higher, would help keep the greenback undepinned indefinitely…
As stated yesterday:
(…) Reflation is slowly giving way to stagflation – GDP growth is slowing down while inflation isn‘t disappearing, to put it mildly. The copper upswing isn‘t so much a function of improving economy prospects but of record low stockpiles. Anyway, much more to look for in the commodities and precious metals bull markets that are likely to appreciate much more than stocks this decade.
Let‘s move right into the charts (all courtesy of www.stockcharts.com).
S&P 500 and Nasdaq Outlook
S&P 500 recovered from the opening setback, and its path of least resistance remains up.
Credit Markets
Debt instruments refused the turn to risk-off, in what looks as promising turn in support of the following S&P 500 upswing.
Gold, Silver and Miners
Gold hasn‘t recovered the ground it lost on Friday, but looks like done declining. The miners don‘t support a bearish turn currently – look for silver to show the way (up).
Crude Oil
Crude oil again didn‘t correct, and oil stocks merely paused – the pace of price increases is slowing down, and a (shallow) bear raid appears a question of time.
Copper
Copper steep upswing was sold into once again, but the bulls don‘t appear to have spoken the last word yet. Sideways consolidation of the high gained ground though looks to be most probable next, followed by even higher prices.
Bitcoin and Ethereum
Crypto gains consolidation with an upward bias continues today, and further gains are ahead.
Summary
Stock market rebound goes on, and fresh ATHs are approaching. These will take time, and I‘m not looking for a sizable correction to strike first. The turn to risk-on isn‘t yet complete, but commodities are showing the way already (as much as it‘s a function of low stockpiles and associated crunch). Treasury yields will continue drifting up, inflation would remain unbroken, and at the same time, wouldn‘t break the stock bull run. Silver and cryptos are another bullish picks to capitalize on. Patience gold bulls, it‘s the yellow metal priced in USD as opposed to other currencies, that usually breaks out last.
Related: Key Market Shift Confirmed
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