In A Heartbeat

S&P 500 cratered, bonds confirmed, and market breadth took a dive. The advance-decline line is not really in a good shape, and the respite that‘s possibly shaping up for today (alternatively tomorrow) would offer an interesting point to add to shorts once it exhausts itself. Where to look for signs of weakness, and which sectors then? It would be again broad-based, with more attention turning to real estate, and financials, and not leaving healthcare or biotech unscathed. Semiconductors also aren‘t foretelling a great outcome for tech, but the behemoths with TSLA are likely to help in the days ahead. Yesterday‘s VIX certainly calmed down and appears to need a while to recharge batteries.

And little wonder if you look at macroeconomics – the two charts below show that while we aren‘t yet feeling the effects of all the tightening in (let alone the aggressive moves still to come), the effects upon liquidity (FINRA margin debt serves as a nice proxy) have been already felt for quite a few months – and are getting worse. Little wonder that I assign practically zero odds of this S&P 500 rally morphing into a bull market even though it did beat the 50% retracement from the Jun lows. Less fuel is available to power the buying. Charts courtesy of St. Louis Fed and Ycharts.

Today‘s key data points are manufacturing and services PMIs, and I‘m looking at manufacturing to be the likelier candidate to disappoint than services. The greater the undershoot, the fresher (misguided but still) bets on the Fed pivot approaching, which should translate into a risk-on turn today.

Fed balance sheet

FINRA margin debt

To feel the daily pulse, let‘s move right into the charts (all courtesy of www.stockcharts.com) – today‘s full-scale article features good 6 ones.
 

Gold, Silver, and Miners

gold, silver and miners

Precious metals indeed find no rest, confirming the bearish prognosis. Unless bonds turn again, the metals would have a hard time – and one daily pause in the miners doesn‘t solve that. Barring a hawkish surprise outdoing Fed plans, gold would not panic much more beyond moving in sympathy with nominal yields – the $1,750s area is critical, breaking which can quicken the decline.
 

Crude Oil

crude oil

Crude oil refused lower prices, and it looks to me like there won‘t be too many visits to the lower border of this declining wedge-like structure. Price consolidation right above it is most likely now – good idea to have taken meaningful short profits off the table yesterday.
 

Copper

copper

The copper chart is still bullish, and the selling attempts are very shallow. Moreover, they‘re bound to disappear once risk-on sets in.
 

Bitcoin and Ethereum

Bitcoin and Ethereum

Cryptos are ready for a reprieve, and the caption says it all.


More By This Author:

Enticing The Bears
It Started
Daily Check

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