S&P 500 is turning around, and odds are that would be so till the FOMC later today. The pressure on Powell to be really dovish is on. I‘m looking for a lot of uncertainty and flexibility introduction, and much less concrete rate hikes talk that wasn‘t sufficient to crush inflation when the going was relatively good, by the way.

As stated yesterday:

(…) The rising tide of fundamentals constellation favoring higher real asset prices would continue kicking in, especially when the markets sense a more profound Fed turn than we saw lately with the 50bp into 25bp for Mar FOMC. Make no mistake, the inflation horse has left the barn well over a year ago, and doesn‘t intend to come back or be tamed.

Not that real assets including precious metals would be reversing on a lasting basis here – the markets are content that especially black gold keeps flowing at whatever price, to whatever buyer(s) willing to clinch the deal. Sure, it‘s exerting downward pressure on the commodity, but I‘m looking for the extraordinary weakness to be reversed.

We‘re seeing such a reversal in commodities already, and precious metals have a „habit“ of joining around the press conference. Yesterday‘s performance of miners and copper provides good enough a hint.

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

S&P 500 and Nasdaq Outlook

S&P 500 upswing looks like it can go on for a while. Interestingly, it was accompanied by oil stocks declining – have we seen THE risk-on turn? This looks to be a temporary reprieve unless the Fed really over-delivers in dovishness.

Credit Markets

HYG is catching some bid, and credit markets are somewhat supporting the risk-on-turn. Yields though don‘t look to have put in a top just yet, which means the stock market bears would return over the coming days.

Gold, Silver, and Miners

Precious metals are looking very attractive, and the short-term bottom appears at hand – this is the way they often trade before the Fed. I‘m fully looking for gold and silver to regain the initiative following the cautious and dovish Fed tone.

Crude Oil

Crude oil didn‘t test the 50-day moving average, and I would expect the bulls to step in here – after all, the Fed can‘t print oil, and when they go dovish, the economy just doesn‘t crash immediately…

Copper

Copper is refusing to decline, and the odd short-term weakness would be reversed – and the same goes for broader commodities, which have been the subject of my recent tweet.

Bitcoin and Ethereum

Cryptos aren‘t fully risk-on, but cautiously giving the bulls the benefit of the doubt. Not without a pinch of salt, though.

Summary

S&P 500 bulls are on the (short-term) run, and definitely need more fuel from the Fed. Significant dovish turn – they would get some, but it wouldn‘t be probably enough to carry risk-on trades through the weekend. The upswing is likely to stall before that, and commodities with precious metals would catch a fresh bid already today. This would be coupled with the dollar not making any kind of upside progress to speak of. The true Fed turn towards easing is though far away still (more than a few months away) – the real asset trades are about patience and tide working in the buyers' favor. The yield curve remains flat as a pancake, and more stagflation talk isn‘t too far…