Gold Selling Is A Bit Extreme, Compared To Dollar And Stocks

Wednesday brought us daily consolidation of prior S&P 500 gains, and that‘s a positive outcome for the bulls. Base building at a higher level, if you will, is looking set to continue also today. The credit market performance reveals that it‘s a reasonable expectation, and the internals examination would reveal the details of a coming run higher.

Gold paused yesterday, and of course, still doesn‘t look ready to rebound. But does it mean it‘s acting consistently weak? No, and today‘s analysis will show that its better days will come – and we won‘t have to wait for all that long.

Let‘s dive into the charts (all courtesy of www.stockcharts.com).

S&P 500 Outlook

S&P 500

Yesterday‘s daily candle was one of hesitation, not marked by any kind of volatile move. The volume also shows that the price moves didn‘t invite much interest to jump in or out.

S&P 500 force index

The Force index nicely illustrates the directionless nature of very short-term trading. After the steep correction, it‘s back to neutral, and the muddle through February ahead can really start.

Credit Markets and Smallcaps

high yield corporate bonds

High yield corporate bonds (HYG ETF) continue trading with an upward bias, and the upper knots don‘t frighten me as the swing structure is positive, and there is no retreat to speak of. I see the credit market strength as conducive to further stock gains.

S&P 500 and Russell 2000

The Russell 2000 (IWM ETF) is doing better than the S&P 500, and this is to be expected in a maturing bull market run. I certainly look for smallcaps to outperform the 500-strong index in the first half of 2021.

S&P 500 Sectoral Peek

technology

Similarly to the S&P 500, technology has been consolidating its gains, yet with a bit more of a bearish flavor. Also, the volume overcame Tuesday‘s levels, unlike the declining S&P 500 one.

value vs growth

Technology being among the stronger sectors, that‘s what the above chart shows. The rotation into value stocks (as the tech took it on the chin) has failed, and this heavyweight sector (led by NYFANG) is again leading stocks higher. As we‘re seeing absolutely no signs of broad-based sectoral outperformance (which would be followed by less and less advancing issues), the stock bull market is far from making a top.

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