Nasdaq Fearing Short End Yields

S&P 500 pushed still higher, but not before retesting 4,515 on stronger than expected housing data. As if Fed tightening odds (regardless of what Daly said) were to be moved – they were not, and actually rate cut expectations are projected now to start in May instead of Jun 2024 (65% odds). The resulting rise in short-term yields though exerted pressure on Nasdaq, leaving it up to cyclicals (with plenty of support from turning oil stocks) to pull S&P 500 a little higher. The key winner – apart from financials and real estate that I first talked early Nov – is Russell 2000 as financial conditions continue easing.

That also resonates with the early Nov call for soft landing hopes returning – bonds and stocks are rising together while the dollar is trending lower. Both precious metals and oil fulfilled (sideways to recovering) expectations for Friday – the price action in copper also continues being promising for metals as yields are primed for more of a retreat. The only watchout is for Nasdaq not starting to weaken here should yields be treading water for a day or two. Nothing that couldn‘t be managed.

Remember my premium charts last week, and that there are still well over $5T in short-term debt invested (money market funds), in a way sitting on the sidelines. With lower yields, housing springs back to life (see Friday‘s data) and I talked that early Nov already. The WMT vs. TGT disconnect can be really chalked down to guidance.

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Let‘s move right into the charts (all courtesy of www.stockcharts.com) – today‘s full scale article contains 6 of them, featuring S&P 500, XLRE, XLF, credit markets, precious metals and oil.

Stocks and Sectors

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Real estate chart shows consolidation, and not a reversal Friday – confirming that the reaction as if rate raising odds went up, has been off mark.

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Financials keep confirming the bullish turn – there is no solid upleg without XLF participating. The degree of enthusiasm is promising for future stock market returns.

Gold, Silver and Miners

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Precious metals upswing isn‘t yet over, and $2,000 would be broken to the upside. The miners downswing volume also speaks for a daily setback and not a reversal. Friday‘s housing data sent short-term yields higher, yet that would still be dialed back as the soft landing trades get more crowded. Meanwhile, gold in yen keeps doing wonders.

Crude Oil

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Crude oil accumulation is there, and a new rally is slowly unfolding – while a brief consolidation of Friday‘s turn is likely, $78.50 would be broken with ease to the upside over the nearest 1-2 weeks.

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