S&P 500 predictably relented, but the resilience of value provides a glimmer of hope. Quite a solid one as the HYG spurt to the downside didn‘t inspire a broader selloff, including in tech. Yesterday was your regular wait-and-see session of prepositioning to today‘s CPI data. This not exactly a leading indicator of inflation clearly hasn‘t peaked, and inflation around the world either. The difference between the U.S. with eurozone, and the rest of the world, is that many other central banks are already on a tightening path.

I count on such a CPI reading that wouldn‘t cause a rush to the exit door and liquidation in fears of Fed going even more hawkish (in rhetoric, it must be said). My series of pre-CPI release tweets have worked out to the letter – and now, it‘s back to the inflation trades.

I already told you in yesterday‘s report:

(…) A reasonably hot inflation figure is expected tomorrow – inflation expectations have risen already yesterday. The fears are that a higher than what used to be called transitory figure, would cut into profit margins and send value lower. Even if inflation (which certainly hasn‘t peaked yet as I‘m on the record for having said already) isn‘t yet strong enough to sink stocks, the Fed‘s reaction to it is. The dynamic of tapering response messing up with the economy would take months to play out – so, the bumpy ride ahead can continue. If only the yield curve stopped from getting ever more inverted…

Markets keep chugging along for the time being, and the warning signs to watch for talked in Monday‘s extensive analysis, aren‘t flashing red.

The pieces of the stock market and commodities rally continuation are in place, and the same goes for precious metals reversing the prior cautious stance. Even cryptos are warming up to the data release.

Looking further ahead in time to 2022, I can‘t understate the bright prospects of agrifoods (DBA) – and it‘s in no way just about the turmoil in fertilizer land.

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

S&P 500 and Nasdaq Outlook

S&P 500 downswing looks ready to be reversed soon – in spite of the drying up volume which often accompanies bull markets. The daily indicators remain positioned favorably to the bulls.

Credit Markets

HYG weakness looks somewhat overdone to me – the prior upswing is still getting the benefit of my doubt. The coming sessions just shouldn‘t bring a steep HYG decline in my view.

Gold, Silver and Miners

Precious metals are still basing, and I‘m looking for the hesitation to be reversed to the upside. Just see the tough headwinds in comparing silver being almost at its Sep lows while gold is trading much higher. Once the inflation narratives get a renewed boost, silver would play catch up.

Crude Oil

Crude oil upswing is running into predictable headwinds, but I‘m looking at the next attempt at $72 to succeed, and for $74 to be broken to the upside later on.

Copper

Copper is still lukewarm, and waiting for the broader commodity fires to reignite. The red metal isn‘t in an anticipatory, frontrunning mood – its prolonged consolidation means though it‘s prefectly prepared to rise decisively again.

Bitcoin and Ethereum

Bitcoin and Ethereum are finding buying interest, but the Ethereum underperformance has me still cautious after taking sizable ETH profits off the table yesterday.

Summary

S&P 500 rally is likely to continue today, and the same goes for risk-on and real assets. The Fed evidently won‘t be forced into a more hawkish position in Dec, and the markets are starting to celebrate. Silently celebrate as it‘s not about fireworks, but a reasonable and well bid advance across the board. I hope you‘re likewise positioned!