S&P 500 dicey premarket upswing fizzled out right after the open, volume picked up, and market breadth correspondingly deteriorated. Bonds confirmed, and the higher yields didn‘t even send the dollar much upwards. Together with the sea of red in commodities and precious metals, this smacks of deleveraging, still of the relatively orderly flavor if you look at the well-behaved VIX at 26 only. The steep post-Jackson Hole downswing will pause, but there isn‘t a sign that would happen precisely today yet.

Looking at the daily chart of CRB Index, crude oil, gold, and silver with the miners, odds are that we would see a repeat of yesterday‘s action today as well – to a good degree. Not much has really changed since my yesterday‘s review of real assets and cryptos, and especially the crude oil setback (reinforced by the Iran deal speculation Europe is pinning its eyes on) is generally worrying. The Fed keeps hammering the same message, and the short end of the curve keeps duly rising. Tombstone reminder for those overstaying in the S&P 500 rally to the 200-day moving average, would be „don‘t fight the Fed – the central bank doesn‘t have your bank now, and would act on the out-of-control inflation“.

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

S&P 500 and Nasdaq Outlook

S&P 500 bears still have the undeniable strategic initiative, and the pace of the downswing is really all that‘s being questioned. Earnings are still to deteriorate, and P/E is to go down – inflation isn‘t declining fast enough, so equities react appropriately. CFA material 101.
 

Credit Markets

HYG rested a little only on an intraday basis, and objectively speaking its downswing didn‘t trigger a genuine bloodbath in stocks. This can change but the steady dollar kind of doesn‘t hint at that right next. The S&P 500 bears should take it easy because the coming days would be and feel like a consolidation compared to what we have been justified through.

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