SPX Short Squeeze – Here Or Not?

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

S&P 500 Outlook

S&P 500

The dip was bought right at the open yesterday, in a tentative sign of strength. A superficial one, precisely, for the correction might not be over.

Credit Markets

HYG and LQD

Both the high yield corporate bonds (HYG ETF) and investment grade ones (LQD ETF) rose in tandem, but the volume wasn‘t entirely there – similar to stocks. Regardless of the sectoral imbalances discussed below, it‘s a strong argument for why any resumption of selling won‘t likely get too far.

Technology and Value

tech, NYFANG and value

Value keeps pulling the 500-strong index ahead while the leadership in tech remains outside the woefully underperforming heavyweights. I‘m looking at that to change over time, though.

Gold and Silver

gold, HUI and TLT

Gold upswing is still in a healthy shape, with miners outperforming. The retreating nominal yields have turned into a tailwind as gold gathers strength to break the $1,800 level shortly.

gold, silver and copper to 10-year Treasuries yield

Yesterday was characterized by silver‘s strength, and that means an issue of varying proportions usually ahead. But I am interpreting the chart as a weak setback only, a very temporary one – this isn‘t any kind of turnaround.

Gold‘s Big Picture

miners to gold weekly

This is the key chart proving that the precious metals upleg has started weeks ago – the caption says it all. Look for much higher prices ahead as weeks and months roll by.

Summary

The shallow S&P 500 consolidation won‘t likely continue today as another good unemployment figure came in, and I look for the sectoral imbalances to improve later today and tomorrow.

Gold and miners are taking a little breather, together with silver. Nothing unexpected or groundbreaking, the precious metals upleg is well established already, and $1,800 will be history as early as next week, when the rip your face off rally continues.

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