A good shallow ES downswing opportunity was lost yesterday premarket – and the almost neutral manufacturing data didn‘t force buyers to waver. The key sectors I‘ve been highlighting lately so often had done really well, and the table is set for expansion in breadth following retail sales. The latte session ambush from Monday doesn‘t change that.

Risk assets are performing nicely, and especially precious metals are showing the way for today while crude oil held my support level and would also peek higher alongside copper.

Quoting from yesterday‘s extensive analysis as regards retail sales:

(…) The still very expansionary fiscal policy is to also to contribute to the resilient consumer, and nominal retail sales wouldn‘t do poorly – discretionaries would see internal rotation while staples would come to the fore as inflation returns – it‘s a question of when, not if.

For now, even banks are starting to look bright – JPM and other earnings weren‘t at all bad. And even if Q4 earnings estimated for the whole of S&P 500 are too optimistic in my view, the improving market breadth and solid rotations both into non-tech and inside tech when Fed hawkishness is disregarded, doesn‘t provide the necessary ingredients for a steep or lasting selloff over the nearest weeks – these are to bring rather good XLI showing after industrials didn‘t break lower in May (and this applies to non-US manufacturing too), XLB and XLE are to keep improving together with XLF that didn‘t break lower following the Mar banking troubles.

This S&P 500 rally is becoming a rally of more than Top 7 stocks, and it‘s getting entrenched as the disinflationary data aftermath showed. Sure, it‘s on the very optimistic side, coupled with key breakdown in USD below 101-102 without really looking back.

I‘ve discussed much more in Sunday‘s extended video taking 17min, just check it for fiscal policy prospects meeting still tight Fed and earnings projections especialy as regards Q4 – Fed that won‘t cut rates any time soon, and will have to face returing inflation in autumn.

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

Gold, Silver, and Miners

Precious metals are primed for a move, and odds are it would lead them higher – the only question is whether that happens already today, or would take a day more. I‘m favoring today.
 

Crude Oil

Crude oil buyers stepped in early, and $73.50 – $74 level held. Commodities and waking up, and copper is also likely to recover yesterday‘s setback in short order.

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