S&P 500 reversed right on the waiting entry order, and open short profits can be expected to grow. The Sunday warning about bonds is turning out prescient – the pause in bond yields didn‘t last long, inflation expectations are untamed, and the pressure on the Fed to keep tightening, is on. By the tech and value candles‘ shape, trouble is brewing – the next downleg is ready to unfold, probably earlier than Thursday‘s ECB press conference. Not that I would be looking for long-lasting and demonstrably credible hawkish turn, but for attempts to jawbone the rising yield differentials on the eurozone periphery. Friday‘s CPI data though can be counted on to deliver a catalyst – the medium-term downtrend in stocks is well established.
Precious metals are providing a short-term conflicting view – gold and miners down while silver went up. That‘s daily white noise in my view, and we can look for a stronger day in the yellow metal today (to make up for yesterday‘s poorer showing). Well, the dollar and yields rose, but gold is holding in a nice consolidation, well bid and ready to launch higher at moment‘s notice.
Copper is still retracing Thursday‘s sharp upswing as the sellers‘ power is waning – sideways consolidation would come next, giving way to a directional move. Depending upon the straits of the real economy and Fed moves anticipation, its path would be decided, and odds are it would lead slowly higher. Crude oil hasn‘t yet peaked by a long shot, and that‘s reflecting upon the stock market and other commodities‘ path, meaning that the short-term downside in the red metal won‘t be meaningful. Remember that not enough oil demand has been destroyed – the sad truth is that this is what ultimately breaks inflation, not the measured staircase Fed moves (behind the curve and market expectations).
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