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The S&P 500 closed the week below fresh highs thanks to a bout in tech and relative weakness in some semiconductors. The rally is broadening, though, with XLI and XLV appearing to be well-positioned -- and that‘s on top of the three sectors I previously mentioned that look poised to outperform the S&P 500 over the medium-term. The theme of disinflation continues, as core PCE came in line with expectations.

So, what‘s driving the broadening rally, and how much more can it push to fresh highs? I‘ll develop yesterday‘s thought about inflation -- those of you following my thoughts closely know that I called for high inflation data in early autumn, and for lower inflation to return, which we haven‘t seen the end of yet.

The Treasury has been relieving the pressure on long-term yields over the last few months, with reliance on more short-term debt issuance, yet yields still rose in January by around 0.5%, as seen with the 10-year yield.

That‘s likely a function of wild gyrations in rate cut odds estimates, as the odds for a rate cut on March have gone as high as over 75% to as low as below 40%. While I still see a rate cut in March as more favorable than not, I‘m also in favor of yields rolling over to the downside, and I could see the 10-year closing the year well, well below 4% or even 3.75%.

The only open question that now remains is how long this engine of easy liquidity (not to mention China's stimulus finally arriving) could last before the players decide to get more powder dry, and the reverse repo facility starts growing again (as discussed last week).

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It appears to be the time for more profits, whether they are on a swing trade or intraday basis, with a series of three quick trades we delivered. Let‘s move right onto the charts, courtesy of StockCharts. Today‘s full scale article contains 6 of them, featuring the S&P 500, sectoral picks, precious metals, oil, and copper.

Gold, Silver, and Miners

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Optimists may say that gold is basing here (note the low volume rejection of Friday‘s highs), and the four-hour chart seems to agree. While gold and silver are not very exciting at the moment, it may be worthwhile to position yourself for the upcoming leg up on retreating yields. The only thing to look out for would be those common, pre-FOMC smackdowns.

Crude Oil

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Crude oil consolidated the gains from the sharp acceleration, and the following push above the 200-day moving average could prove to be successful. The $82.50 level is the upper border of the resistance zone, and odds are that it could be reached in a few short weeks at the latest.

Copper

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The area of $3.81-$3.82 could be a fine long entry point if the market declines to that range. Commodities have clearly changed the tune, and dips are to be bought as a testament to the strengthening of the real economy.

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