It Begins
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S&P 500 reprieve that wasn‘t – the buyers didn‘t arrive, and the overnight military action sparking serious asset moves, shows that buying the dip would have been a bad idea. And it still is. Risk-on assets are likely to suffer, and I‘m not looking for a sharp, V-shaped rebound. The partial retracement seen in cryptos wouldn‘t translate to much upside in paper assets – it will likely be sold into as the bottom would take time to form. The safe haven premium seen in precious metals, crude oil and other real assets would ebb and flow, but a higher base has been established. The world has changed overnight, and recognition thereof is still pending.
I think it‘s clear why I had been derisking as much as possible, wary of volatility both ways in paper assets, and betting instead on a mix of real assets. This has been hugely paying off to subscribers and readers likewise favoring gold and crude oil with some copper added for good measure.
Let‘s move right into the charts (all courtesy of www.stockcharts.com).
S&P 500 and Nasdaq Outlook
This isn‘t how an S&P 500 bottom looks like – downswing continues with more volatility ahead.
Credit Markets
HYG is going down again, and credit markets are turning risk-off – look for Treasuries to do relatively better next, with little impact upon stocks.
Gold, Silver and Miners
Precious metals fireworks continue, and the upswing got a poweful ally. Whatever retracement seen next, would be marginal in light of the developments.
Crude Oil
Crude oil upswing can be counted on to continue, and oil stocks would remain among the best performing S&P 500 pockets. Black gold is though notorious for its wild volatility, and the coming days won‘t be an exception.
Copper
Copper upswing would take time to develop, especially now – but the breakout in base metals is on, the inflationary messaging is still there and thriving.
Bitcoin and Ethereum
Cryptos aren‘t in a rally mode, but are attempting to put in a low. I don‘t think it would hold, the dust hasn‘t settled yet.
Summary
- S&P 500 is plunging, and attempting to base, but more selling would inevitably hit. The overnight dust hasn‘t settled yet, but the panic lows would not happen today. Even if it weren‘t for geopolitics, stocks were in rough waters for weeks already, in a serious, yields and liquidity driven correction, with a slowing real economy on top. For all the short-term focus, the buying opportunity would materialize only once the Fed turns – by autumn 2022. The best places to be in right now, are those presented below – precious metals and commodities – as inflation fires continue to rage on.
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