S&P 500 fulfilled my Sat call for consolidation Monday, and then that of the buyers slowly stepping in again – broadening rally, we didn‘t have to wait too long. Sat article features more of data and market reaction expectations:

(…) Energy and materials of course continued standing out, and gold with silver breakout attempts were dialed back. Oil is though preparing to take on $82.50 via stabilizing above $80.50. The common denominator is China fears – will they devalue, inject liquidity via lowering reserve requirement ratio etc.

Jun rate cut odds even rose to 67% – there is market conviction about Powell having his way over more hesitant FOMC members via the job market upcoming weakness countering. The stock market rally is though tired in its rotations going into Monday, and the days following would be more favorable to fresh gains and to return of volatility – core PCE wouldn‘t be taken lightly, and will probably come in at 0.4%, which is above expectations. It‘s the day before though when unemployment claims not below the expected 214K would reinforce rate cut bets, acting risk-on.

All in all, no sizable setback to risk taking is ahead, and the respite in rally continuation that I see as likely Monday and perhaps Tuesday would help strengthen the rally internals, e.g. by giving better traction to financials (they‘ll come back strong from Friday). The winning sectors would remain industrials, energy, materials and tech – the bulls want to see discretionaries do better than communications in the near term.

Things are going very fine (hotter than expected goods orders data will be clearly bought into later today), and both gold and oil have sprung back to life – as much positioning for upcoming data as equities. Clients aren‘t surprised, what can I say – larger gains are still to come as I am not looking for serious disruption to the trends in place this week.

S&P 500 and Nasdaq Outlook

(Click on image to enlarge)

5,270 technical support was in the end reached, and stocks quite clearly rebounded – no fear of the closing hesitation. Thursday highs will be overcome shortly, and swing traders can go on riding the uptrend. 5,308 would provide only marginal resistence on the way higher.

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