SPX Correction Arriving Or Not?

One more day of upside rejection in S&P 500, in what is now quite a long stretch of prices going mostly sideways. As unsteady as VIX seems at the moment, it doesn‘t flash the danger of spiking in this data-light week, and neither does the put/call ratio. As I wrote yesterday about the selling pressure, these tight range days accompanied by 30-ish point corrections is as good as it gets when the Fed still has its foot on the accelerate pedal.

Yes, you can ignore the Kaplan trial balloon (have you checked when he gets to vote on the FOMC?) that spiked the dollar on Friday but didn‘t put all that a solid floor before long-dated Treasuries as seen in their intraday reversal.

Highlighting the key Treasury, inflation, and reflation thoughts of yesterday, as these are still here to power stocks higher:

(…) the 10-year yield has been quite well behaved lately, closing at 1.65% only on Friday. The April calm seems to be over, and I‘m looking for the instrument to trade at 1.80% at least at the onset of summer. Then, let‘s see how the September price increases telegraphed by Procter & Gamble influence the offtake – will the price leader be followed by its competitors? That‘s one of the key pieces of the inflation stickiness puzzle – and I think others will follow, and P&G sales and profitability won‘t suffer. The company is on par with Coca-Cola when it comes to dividends really.

Once there, we would progress further in the reflation cycle when inflation is no longer benign and anchored. We‘re though still quite a way from when the Fed tries to sell rising rates as proof of strengthening economic recovery – once the bond market would get to doubt this story though, it would be game over for its recent tame behavior.

The gold market enjoyed its fireworks, aided mightily by the silver squeeze run. The inflation theme is getting rightfully increasing attention, and commodities are on the run across the board. Just check yesterday‘s oil analysis or the bullish copper calls of mine. I could just as easily say that copper is the new gold – it has been certainly acting as one over the past many months, yet the yellow metal‘s time in the limelight is about here now. And don‘t forget about silver bring you the best of two worlds – the monetary and industrial applications ones.

1 2 3
View single page >> |

Subscriber to Monica‘s Insider Club for trade calls and intraday updates.

Disclaimer: All essays, ...

more
How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.