Tech Holds The Key To S&P 500

The Powell inspired, coinciding (have your pick) S&P 500 stop run is almost history now, with the futures trading over 3,880 again as we speak. No surprise here, but since the long-term Treasuries plunge went on largely unabated, that‘s concerning. Even if not now as in right away, TLT and TLH have to power to trouble the stock bulls seriously.

And the financials benefiting from the greater spread, won‘t save the day, as the key chart to watch now is technology and also healthcare. Healthcare especially because biotech didn‘t get its act together yesterday really, while semiconductors did better. With consumer discretionaries hurt, utilities and consumer staples can‘t be relied on in a rising rates environment, and communications can‘t save the day either. The sectoral outlook remains mixed, even as value continues greatly outperforming growth this month.

The stock bulls simply need tech clearly stabilized and turning here so as to think about new S&P 500 highs again. Long-term Treasuries are starting to hold greater sway over the stock market fate now, too. The dollar‘s woes thus far continue playing out largely in the background.

Did gold shake off the TLT shackles? Still early to say, but the clear, directionally opposite move gives the bulls benefit of the doubt thus far. Yesterday‘s gold session didn‘t convince me, so I am not trumpeting the end of yellow metal‘s downside yet. Still, cautious optimism remains – even in the short run, let alone for the medium- to long-term: there, the (bullish) picture is simply clearer.

Let‘s remember my yesterday‘s words about trends and flashes in the pan:

(…) Powell‘s testimony is about to bring volatility, but does it have the power to change underlying trends? Not really – while his latest high profile assessments brought about a downswing, stocks recovered in spite of the GameStop (contagion?) drama too. Should we see a replay of the above, new highs are coming – and they are, in both stocks and precious metals. We‘re in a commodities supercycle on top!

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Monica Kingsley 1 month ago Author's comment

Technology holds the key to stocks - and keeps acting rather weak. Rising rates are starting to bite SPX and financials won't save it, and healthcare needs to catch its breath too. Value can't simply carry the full weight.

I was not persuaded by yesterday's gold price action, tweeted mightily - the first swallow of real, directional decoupling from TLT has to prove itself, and it's getting challenged. Amid mildly positive commodities and the dollar going not much anywhere, the gold jury is still a little out while silver and platinum can attempt another run.

It looks like gold can attempt a daily recovery from the low $1790s now that silver reversed. Copper is strong as well, and oil is running. And the dollar? +0.20% won't cut it - too weak a reaction to TLT. The bond market isn't convinced...