Stocks Up But Look At Metals And Oil

S&P 500 is again at new highs, but driven by value this time. Not that tech would disappoint, but heavyweights paused. Credit markets remained constructive – they didn‘t decline, but the daily growth was concentrated in the quality debt instruments. That‘s what tech would be supposed to like, but even the semiconductors took a breather. Instead, financials, industrials and energy (my latest picks for broadening stock market leadership) did well regardless.

That‘s one more piece of evidence that the stock bull‘s path of least resistance is higher – the other being the VIX and put/call ratio. The 10-year Treasury yield keeps within the latest range, and might probe lower values, at a time when the dollar is catching a strong bid. We‘re still in a reflation, in the reopening trades stage – one where inflation expectations have been (unduly) hammered down while inflation hasn‘t taken a corresponding turn. Notably, commodities haven‘t been derailed in the least, so pay no attention to lumber – the real assets‘ world is much richer and profitable.

True, precious metals have been hit hard, but stabilized post FOMC, as the real rates effect and underestimated inflation is working in their favor. Coupled with commodities on fire, more than partially suspect Fed tightening and tapering promises, silver is the metal that would do better on the rebound after the smackdown. And it did yesterday, accompanied by the turn in the miners as they finally led on a daily basis.

Crude oil continues thriving, and the Saudia Arabia – Russia negotiation reports are helping. Oil stocks have also turned the corner yesterday, supporting non-feverish gains in black gold yesterday.

Crypto bears are probing lower values in Bitcoin and Ethereum, selling into setups slowly but surely attempting a bullish turn from recent consolidations. Ethereum still keeps doing relatively better, which is a bullish sign.

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

S&P 500 and Nasdaq Outlook

S&P 500 and Nasdaq 100

S&P 500 is going higher, with tech stocks consolidating on the day, but far from making their top.

Credit Markets

HYG, LQD and TLT

Credit markets performance was mixed yesterday, but overall still constructive.

Technology and Value

technology, $NYFANG and value

Value keeps basing with a bullish bias, still set to underperform tech.

Gold, Silver and Miners

gold, HUI and TLT

Gold mustered some strength in the face of rising dollar, and so did miners – the yield-inflation spread is getting too out of whack here, let alone the mispriced inflation expectations.

gold, silver and copper to 10-year yield

Silver and copper welcomed the turn even more so than gold did. Especially the copper to 10-year yield ratio keeps counterbalancing the weak miners‘ performance of late, cushioning precious metals.

Bitcoin and Ethereum

Bitcoin and Ethereum

We‘re at another turning point in this long consolidation.

Summary

S&P 500 keeps trading in a tight range with a bullish bias, characterized by sectoral rotations and improving market breadth including in Nasdaq.

Gold and silver bulls are getting on the move, as the low nominal yields are helping attract buying interest in this beaten down sector.

Crude oil keeps pushing higher, and the OPEC meeting isn‘t going to disappoint if market expectations are to be trusted.

Bitcoin and Ethereum pullback is still on, but the range keeps narrowing. A bigger move would come, and as per the weekly charts, odds are that it would be in the bulls‘ favor, regardless of the Bitcoin death cross. The daily charts‘ positive outlook in the very short-term (indicator divergencies in the making) hasn‘t been broken.

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Disclaimer: All essays, ...

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