S&P 500 refused to swing higher yesterday, and bonds weren‘t much risk-on either. Revisiting the neutral Fed funds rate comments didn‘t do much good for risk sentiment, even though HYG doesn‘t yet reflect that with its closing price. A new attempt at 4,140s looks to be in the making, and even if we get a break higher, it‘s going to be a fake one, and fail. It would also coincide with a rejection of lower VIX values around 22, in favor of reverting back to the high 20s recent average.

The current optimism seems misplaced, and the upcoming ISM services PMI would reveal the slowly deteriorating internals of economic growth. Coupled with manufacturing PMI, these leading indicators illustrate a tough real economy to come in late 2022 / early 2023 – the dreaded R word.

To feel the daily pulse, let‘s move right into the charts (all courtesy of Stockcharts.com)

S&P 500 and Nasdaq Outlook

S&P 500 may be carving out a bullish flag, but I‘m not looking for any break higher to stick.

Credit Markets

TLT hasn‘t topped yet, and as we progress along in Aug, HYG would be getting into increasingly hot waters even if there is not that much chart deterioration visible now. The implications are bearish stocks in the medium-term.

Bitcoin and Ethereum

Cryptos continue being vulnerable, and I do9n‘t trust the intraday upswing – no technically significant level would be breached, there is nothing to turn this ship around yet.

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