What‘s Not To Love About Crypto Fireworks

Another weak selling attempt in stocks – are these setting up for tomorrow‘s NFPs volatility? It sure appears so, but buy the dip mentality looks likely to emerge victorious. The current period of low VIX will probably give way to a brief spike, which within bull markets is usually resolved with another upswing.

No matter the momentary hesitation in the credit markets, where we‘re moving two steps forward, one step backwards. Or rather two steps backwards, as can be seen this week. Risk off is still with us as key commodities aren‘t surging, leaving yesterday‘s silver upswing a little suspect on a daily basis. Copper and oil are struggling somewhat at the moment as well, taking (a bit too much) time as the dollar is only modestly declining and yields aren‘t rising.

The current trading environment favors still risk off, sectoral rotations are tame, and inflation expectations continue basing before money printing becomes an ever bigger problem for 2022 and the years ahead. Ethereum keeps doing wonders, and Bitcoin is joining in – finally, as expected. Hope you‘re riding open profitable positions too!

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

S&P 500 and Nasdaq Outlook

S&P 500 and Nasdaq

Two recent upswing rejections, that‘s the only thing standing out this week. The sideways to up grind goes on, and as tomorrow‘s NFPs aren‘t likely to throw a serious spanner in the works, it‘s set to continue.

Credit Markets

HYG, LQD and TLT

Credit markets are still facing crossroads – either HYG consolidates without meaningful downside breaking below yesterday‘s lows while quality debt instruments rebound, or the high yield corporate bonds would show daily weakness and join LQD and TLT. An outcome closer to the first scenario was more likely in my view yesterday, and did materialize. The issue is that it‘ll likely have to play out once again today. So, expect the risk-on parts of the market to do worse than tech.

Gold, Silver and Miners

gold, HUI and TIPS

Not a picture of daily strength in the precious metals – the bulls will have to wait for the real move tomorrow. Ìn spite of silver outperformance, the headline risk is still to the upside these weeks.

Crude Oil

crude oil

Crude oil rose from the dead yesterday, and would better clear the $69 fast to the upside. The daily volume is indicative of accumulation, so the bulls still have a good chance.

Copper

copper

CRB Index was little changed while copper dived. Steep downswing continuation is unlikely – the inflation trades aren‘t rolling over, and neither is the real economy. The current soft patch is likely to be resolved with another upswing in the red metal, bringing it back above the 50-day moving average.

Bitcoin and Ethereum

Bitcoin and Ethereum

Cryptos are waking up again, and it‘s about the prolonged Bitcoin consolidation giving way to an upswing too. More gains were indeed ahead.

Summary

Risk-on trades continue facing headwinds, but look for them to gain the upper hand. Tomorrow‘s NFPs aren‘t likely to really disappoint, or to invite fresh Fed speculations. Solid close to the week seems at hand.

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Disclaimer: All essays, ...

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