Deterioration, that is – be it in S&P 500 market breadth or the jobs data. More to come, obviously, the disappearing liquidity is making itself felt broadly, and the real economy weakness hasn‘t yet arrived in earnest. This is still the environment of relatively fine but perceptibly slowing growth where technical recession can be declared as in, literally any moment (thanks to monetary tightening). Notably, we never escaped manufacturing recession in similar circumstances, and I had been clear on the hard landing realities recognition to spread like wildfire in the mainstream over the months to come. So far, no signs of systemic risk – but real estate and commodities are feeling the pinch seriously already. VIX is also trending higher rather continuously – the 25 level was indeed vigorously defended by the bears. That has all facilitated yesterday‘s sharp turn in my calls, namely in putting the spread trades to rest. Gold is treading patiently while cryptos can‘t obviously take off. Forces of short-term gravity are taking over….

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

S&P 500 and Nasdaq Outlook

Promising upper knot, very promising. Maybe the 3,830s zone wouldn‘t be even tested – all that‘s needed, is for bonds to cooperate. And given the dollar showing today, it‘s perfectly imaginable.
 

Credit Markets

The much-awaited turn in long-dated Treasuries higher is here. That‘s where the engine of further recognition of darkening skies in stocks, would come from. HYG is slowly getting the message, and it would be great if it led to the downside now.
 

Crude Oil

Crude oil is pausing, making up its mind – the backdrop is richly described in the caption. Energy certainly holds better very short-term prospects than base metals or even some agrifoods.
 

Copper

Economically sensitive commodities are losing altitude, a bit too readily. That‘s a sign of more downside to come, and copper is arguably the best example thereof.