S&P 500 erased opening downside, not unexpectedly. Markets say we‘ve turned the corner, and while the medium-term correction isn‘t over, we‘re going higher for now. The tired performance in credit markets suggests that the pace of the upswing would indeed likely slow, but the dips are being bought – even the 4,300 overnight level held unchallenged.

VIX is slowly calming down, and it wouldn‘t be a one-way ride. I hate to say it, but we‘re trading closer to the more complacent end of the volatility spectrum – that‘s though in line with my assumption of toned down price appreciation expectations that I discussed on Sunday and yesterday:

(…) While we made local lows on Thursday after all, the upside momentum is likely to slow down next – this week would bring a consolidation within a very headline sensitive environment. It‘s looking good for the bulls at the moment – till the dynamic of events beyond markets changes.

Inflation isn‘t wavering, and I‘m not looking for its meaningful deceleration given the events since Thursday, no. Friday is likely to mark a buying opportunity beyond oil and copper – these longs have very good prospects. Another part of the S&P 500 upswing explanation were the still fine fresh orders data – while the real economy has noticeably decelerated (and Q1 GDP growth would be underwhelming), solid figures would return in the latter quarters of 2022. That‘s also behind the gold downswing on Friday, which hadn‘t been confirmed by the miners – the very bright future ahead for precious metals is undisputable. And the same goes for crude oil as oil stocks foretell – the fresh long crude trade together with long S&P 500 one, are both solidly in the black already.

Precious metals have found a floor, and aren‘t selling off either. In fact, they are looking at a great week ahead, and the same goes for crude oil followed to a lesser degree by copper. Weekend developments on the financial front triggered a rush into cryptos, and the bullish prospects I presented yesterday, are coming to fruition.

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

S&P 500 and Nasdaq Outlook

Daily S&P 500 consolidation as the bulls did shake off the opening setback rather easily – and the same goes for the late session trip approaching 4,310s. Expect more volatility of the current flavor, and higher prices then.

Credit Markets

HYG managed to close above Friday‘s values, and the overall bond market strength bodes well for risk appetite ahead. Let‘s consolidate first, and march higher later.

Gold, Silver, and Miners

Precious metals are consolidating the high ground gained, miners aren‘t yielding, and silver weakness yesterday actually bodes well for the very short term. Launching pad before the next upleg.

Crude Oil

Crude oil bears have a hard time keeping black gold below $100. The table is clearly set for further gains – the chart can be hardly more bullish.

Copper

Copper is a laggard, but will still participate in the upswing. Its current underperformance as highlighted by yesterday‘s downswing is a bit too odd, i.e. bound to be reversed.

Bitcoin and Ethereum

Crypto bulls were indeed the stronger party, and similarly to gold, it‘s hard to imagine a deep dive coming to fruition. I‘m looking for the safety trade to be ebbing and flowing, now with some crypto participation sprinkled on top.

Summary

S&P 500 turnaround goes on, and we‘re undergoing a consolidation that‘s as calm as can be given the recent volatility. Credit markets and the dollar though continue favoring the paper asset bulls now, but their gains would pale in comparison with select commodities such as oil and gold‘s newfound floor. Even agrifoods look to be sold down a bit too hard, and I‘m not looking for them to be languishing next as much as they have been over the last two trading days. Cryptos upswing highlights the present global uncertainties faced – as I have written on Thursday that the world has changed, the same applies for weekend banking events being reflected in the markets yesterday.