S&P 500 duly took the bearish unemployment claims message (boom territory around 200K translated into more tightening pressure) and traded well below the key 3,955 level – until the Bostic (no FOMC voter) struck. Some hawkish lines mixed with the key allusion to summer hiking pause got the bears scared, ushering in a little short squeeze with power to reach higher still

This risk-on-turn is though built on poor foundations, from weak market breadth, bond volume not surging, spurious USD, tech and cyclicals (financials) action that relegate meaningful resolutions to next week. Suffice it to say, I‘m not looking for bullish medium-term results, and continue expecting the 200-day moving average in ES_F to break to the downside.

Worth noting that apart from Sweden and Europe in general, the economic outlook (inflation and recession equalling stagflation) keeps progressively darkening – now add in ECB talk of a 4% terminal rate (hello BoJ defending 0.5% JGB yield), and upcoming ISM services PMI that won‘t be a scoop, and will instead confirm my notion of US LEIs being still far away from bottoming, i.e. the stock market bear continuing in spite of the positive S&P 500 showing ahead today (as per both progress tweets in one, linked).

I‘m opening today‘s analysis with many more markets covered than the following two charts would indicate, to everyone. Have a great, calm, and fulfilling weekend!

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

S&P 500 and Nasdaq Outlook

Prices won’t drop below 3,955 today as the slow grilling of the bears has to continue for a while longer. 3,980 target reached – not even 4,015 (the location of a more serious battle) would change the picture. Real estate, manufacturing, earnings, and employment would keep getting it, and decreasing liquidity would keep biting. Only below 3,910, the pace of decline quickens – before that, it’s a tug of war with different variations of Fed pivot playing out – 3,860s then being the accelerator, but we’re still weeks away from that figure as decent bond market underperformance has to return, especially on the junk bonds side.
 

Precious Metals, Copper, and Oil

That’s three days of promising price action in a row – and the successfully floated Fed dovish turn (mis)perception would only help precious metals. What’s long-term key, is the metals’ resilience to the USD upswing (around 20% through to peak), and that’s going to continue even when liquidity is being withdrawn (making for gold to do better than silver).

Copper remains the most resilient of the real assets crowd I’m covering, with no change since those late 2022 articles trumping the red metal. That goes beyond China's credit and economic activity expansion that’s underpinning crude oil even as it has to pause around $78 on totally unconvincing volume yesterday – it’ll be quite a feat to break again above the key $82.50.

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Once Again Fine
The Countdown
Recession Anatomy