S&P 500 made a sharp turn both on and following NFPs as per the detailed prediction made – and all clients enjoyed that tremendously. Nasdaq continued leading higher, and truly stellar gains of all three calls made intraday corresponded to that. Gold traders were likewise protected from the brief and sharp risk-off move near the top by knowing ahead when to boot (similarly as regards the bottom picking efforts looking promising Friday, but exit call renewed in the European morning before further decline – remember that the yellow metal typically takes longer than stocks to recover following a sharp hit), with oil holding onto only the third reasonable support (just gyrating around $71.80 support given, but I view it as also vulnerable to the downside very short-term).

NFPs caught the market off guard via the 353K figure, but most of the jobs created were lower paying even part-time ones (healthcare, various services incl. retail sectors saw inflows). There is no whiff of a recession in 1H 2024, and the incoming data didn‘t exactly support a soft landing – the result was sinking of Mar rate cut odd hopes and sharp daily (counter trend) upswing in yields taking 10y one to 4.05% (running on borrowed time, not yet reversed).

No matter the waning momentum with NVDA and MSFT standing most steadfast among the Magnificent 7 (you know my other well-publicized calls and analyses beyond NFLX and META this year and last), the stock market rally that‘s quite in the latter innings, would continue for more than a few weeks longer before consolidation takes over. In case the sharp pace of gains continues and a more pronounced bearish capitulation develops, the overshoot gives way to deeper correction than rather going sideways and a couple of hundred points lower. For now, the outlook is still bullish – as I wrote on Jan 20:

(…) the upcoming stock market push driven by shaking off upcoming disappointment over no cut too soon

Not that Sunday‘s Powell pronouncements on credibility would have snuffed the risk appetite – orderly corrective phase continues, and will again give way to higher prices. Similarly as regards US retaliatory strikes and Iran drawing red lines – it‘s not that equities are complacent, it‘s that they are reflecting e.g. strong earnings realities and no recession reality as described on Jan 20.

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

S&P 500 and Nasdaq Outlook

4,935 support (twice previously unbeaten) was briefly retetested, and then it was practically in a straight line higher from there – till booking the profits before the closing bell. The rally isn‘t over, and no matter the increasingly troubling breadth (META pulling higher XLC by 4% etc), there is no stopping ES at only 5,000.

Sectoral pickers though, attention–narrowing market breadth means that rotations aren‘t going to be as strong as in the Nov-Dec period, which has consequences for all picks given on a weekly basis.
 

Gold, Silver, and Miners

Gold offered great intraday moves to capitalize on lately, and it was bound to get hit on NFPs beat. Now, the yellow metal is to be basing till yields start declining to the downside – and they will, my 3.80% year end target on 10y yield can be moved lower by at least a dozen basis points. For now though, gold isn‘t a buy thanks to poor premarket action already nibbing at Friday‘s intraday lows, and slowly breaking below them.

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