Risk-On Turnaround
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S&P 500 – done declining, not spooked by bearish credit market open, stocks reversed and rallied into the finishing line. HYG almost managed to close the opening, exhaustion gap. On such days, it‘s extremely important to be subscribed, and catch the benefits of fresh trading decisions – here, going long stocks, as early as possible. So, I hope you were served by the intraday stock market update, which I issued right away after that long white candle on 5min TF, 50min into the regular session. The open long positions is going great, thank you very much.
Today‘s rally is powered by debt ceiling relief, postponing the drama. Declining oil and natural gas prices are also taken (correctly) as risk-on confirmations as crude oil tends to serve as a kind of shaddow Fed funds rate in regulating economic activity. Make no mistake, this respite is temporary as we‘ll have to live with triple digit oil next year.
Bottom line, risk-on is back, and the dollar is likely to get under pressure here, and Treasuy yields should continue their rise. Powerful implication for the antidollar plays, including precious metals turning around, and cryptos dealing further profits.
Let‘s move right into the charts (all courtesy of www.stockcharts.com).
S&P 500 and Nasdaq Outlook
S&P 500 rose on respectable volume and improving market breadth – looking for follow through buying.
Credit Markets
HYG was the key mover yesterday, bought on solid volume – the exhaustion gap would soon be history.
Gold, Silver and Miners
Gold and silver are getting ready for an upswing, led by silver. The upper knots and failed silver‘s breakdown are the clues as much as the daily miners revival.
Crude Oil
Crude oil fever calmed down yesterday, but the volume says correction, not a reversal. Let‘s see when the bulls can jump back in.
Copper
Copper seems done declining for now, yet solid buying interest isn‘t there yet. Still looking range bound to me.
Bitcoin and Ethereum
Bitcoin and Ethereum keep consolidating yesterday‘s sharp gains, and the bears look to have made the yesterday discussed very temporary appearance already.
Summary
Stocks have turned, and the oil prices respite and debt ceiling relief are helping to extend the rally. The bottom is in as the bears couldn‘t push S&P 500 down anymore. It‘s back to risk-on again, even though the macro picture of increasing stagflationary risks hasn‘t changed – that would be an environment where commodities do much better than stocks or bonds, and precious metals are ready to join once the Fed wobbles again, sees its bluff called, or confronted with reality.
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