Ever More Risk-On

S&P 500 keeps grinding higher, beyond 4,520 towards fresh ATHs. The VIX is approaching 15, and that means some volatility is likely to return as the current lull won‘t last indefinitely. Yields are steadily rising again, in line with my prior thesis of a summer lull followed by renewed march higher – the 10-year is at 1.65% already, but inflation expectations aren‘t as raging yet as in May when a similar rate was hit (this is part of the explanation why gold is lagging behind currently – it‘s not about hot present inflation figures only).

Tech stocks couldn‘t care less – long gone seem the Mar and late Apr woes accompanied by similar Treasury moves. Value is similarly catching fire, and the improving market breadth bodes well for the stock market bulls. Credit markets have turned more constructive since these yesterday‘s words:

(…) So far so good, and the stock market run continues without marked credit markets confirmation as the risk-on turn there isn‘t complete (yet). Treasury yields aren‘t retreating, yet tech is the driver of the S&P 500 upswing while value keeps treading water. Encouragingly, financials do well – it‘s cyclicals‘ time, and the open S&P 500 long position is very solidly profitable already.

Not only that stock market profits are growing, I‘ve cashed some nice long copper profits before the overnight dive well below 4.70. Both crude oil and natural gas look like taking a breather – shallow one in case of black gold, and one probably more protracted around the 5.00 level (50-day moving average essentially) in case of its more volatile cousin.

Cryptos open profits also keep doing great – there is no correction attempt to speak of really. Coming full circle to precious metals, all that‘s needed is one serious Fed policy misstep. Just imagine if they didn‘t deliver on Nov taper, or if the rate raising speculation was promptly snuffed while inflation fires just kept burning (no, this can‘t be blamed on supply chains really). The Fed is though well aware of market expectations that they themselves had been feeding since Jun.

Still, they‘ll in my view easily make the Monday discussed intentional „mistake“:

(…) we have moved from 1H 2021 Fed saying that inflation was transitory to the current phrase that inflation is transitory, but would last longer than we though. The next stage (arriving latest in Q1 2022) will likely be that inflation is sticky but we have tools to deal with it, followed by putting up a happy face that it‘s a good thing we have inflation after all.

Reflation is slowly giving way to stagflation – GDP growth is slowing down while inflation isn‘t disappearing, to put it mildly. The copper upswing isn‘t so much a function of improving economy prospects but of record low stockpiles. Anyway, much more to look for in the commodities and precious metals bull markets that are likely to appreciate much more than stocks this decade.

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

S&P 500 and Nasdaq Outlook

S&P 500 and Nasdaq

S&P 500 gapped again higher, and the steady move upwards continues – still without obstacles.

Credit Markets


Debt instruments have turned to risk-on, confirming the stock market advance. Rising yields don‘t look to be a problem for now.

Gold, Silver and Miners

gold, HUI and silver

Gold upswing hasn‘t been dashed, but merely delayed – the rest of the precious metals sector isn‘t as weak, and that‘s to be expected.

Crude Oil

crude oil

Crude oil again didn‘t correct, and oil stocks didn‘t even pause yesterday – but as the pace of price increases is slowing down, the shallow downswing looks very much approaching (if not here already).



Copper is ready to consolidate prior steep gains, and its correction would likely be a sideways one not reaching overly far. Then, even higher prices await.

Bitcoin and Ethereum

Bitcoin and Ethereum

Crypto gains consolidation with an upward bias continues today, and further gains are ahead – just like I wrote yesterday.


Stock market rebound goes on, practically nibbling at 4,520. Fresh ATHs are approaching, but given the ascent‘s pace and VIX, aren‘t probably a matter of a few short days. Still, the overall momentum is on the bulls‘ side as credit markets have also turned risk-on yesterday. Commodities aren‘t selling off in the least, but a brief oil and copper consolidation is likely now. Gold seems waiting for a dual confirmation of declining dollar and nominal yields, while silver isn‘t waiting – and it shouldn‘t as the white metal would be leading this unfolding upswing. Cryptos aren‘t hesitating either.

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Disclaimer: All essays, ...

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