The Tax Plan To Slay The Stock Bull?

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

S&P 500 Outlook

S&P 500

The intraday reversal is thus far lacking volume and follow through. That means it would be premature to jump to conclusions as to the shallow correction extending deeper.

Credit Markets

HYG:SHY and S&P 500

The high yield corporate bonds to short-term Treasuries (HYG:SHY) ratio isn‘t panicking either. So far, the move has been hesitant and orderly.

Technology and Value

tech, NYFANG and value

Value keeps being most resilient, and the tech sector stands in the middle, dragged lower by the heavyweights. I would like these to stop leading to the downside so as to declare the correction as approaching its end in terms of prices.

Inflation Expectations

inflation expectations

The inflation expectations are in a momentary limbo, but seem as likely to rise again shortly. That would be one more piece of the puzzle bringing real rates down, making the yellow metal‘s fundamental outlook more positive (as if it hadn‘t been already).

Gold and Silver

gold, HUI and TLT

The decline across the gold sector has been orderly yesterday, and the retreating yields (helped by the stock market turmoil) are putting a nice floor below the king of metals. I look for miners to keep leading higher shortly again.

gold, silver and copper to 10-year Treasuries yield

The key message is the one by the copper to 10-year Treasuries yield – a little hesitation yesterday, hinting at a little more time being necessary to overcome the $1,800 barrier next.

Summary

The S&P 500 is at a crossroads determining how low would the shock-facilitated consolidation stretch. Thus far, signs are modestly leaning in favor of the worst being in, and a gradual repair coming next.

Gold and miners took a daily dive in sympathy with stocks yesterday, but I look for the precious metals sector to recover fastest, and overcome the next resistance convincingly.

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Monica Kingsley 1 month ago Author's comment

Gold ignores the stocks and commodities upswing? How come that even silver is down today, and more so than the yellow metal? Seems odd and weak, especially since USD is tanking as I had been calling for. GDX and copper say - don't worry:

(you can see the chart within my status updates, just posted)

Have a great weekend!