Market overview: On Collision Course
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 down leg is ready to unfold, probably earlier than Thursday‘s ECB press conference. Not that I would be looking for a 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 a 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‘ paths, 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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Monica Kingsley
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All essays, research, and information represent analyses and opinions of Monica Kingsley that are based on available and latest data. Despite careful research and best efforts, it may prove wrong and be subject to change with or without notice. Monica Kingsley does not guarantee the accuracy or thoroughness of the data or information reported. Her content serves educational purposes and should not be relied upon as advice or construed as providing recommendations of any kind. Futures, stocks, and options are financial instruments not suitable for every investor. Please be advised that you invest at your own risk. Monica Kingsley is not a Registered Securities Advisor. By reading her writings, you agree that she will not be held responsible or liable for any decisions you make. Investing, trading, and speculating in financial markets may involve a high risk of loss. Monica Kingsley may have a short or long position in any securities, including those mentioned in her writings, and may make additional purchases and/or sales of those securities without notice.
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