S&P 500 rejected further upside, and is ready for correction within this upswing – the correction characteristics would determine the path forward as hearing Bullard talk two more rate hikes wasn‘t something the market had discounted. 2y yield rose to 5.40% , and 10y is above the midpoint of its recent range at 3.72% – yet stocks are holding up so far, and especially tech, Big Tech is ignoring the glaring disconnect to TLT – these two usually go hand in hand, but GOOGL, MSFT and AAPL with NVDA are still holding up. Talking the last two, there is some short-term technical vulnerability (as in suspect series of latest daily candles) showing up, and I wonder how much more nosebleed for NVDA can come following its earnings tomorrow after the close.
Today is shaping up on a risk-off note, reflecting the poor European manufacturing data that has already pushed many real assets towards my corrective targets. Meanwhile, the long-dated Treasuries outlook is going to change in the following weeks – the run higher will be though more muted than otherwise would have been thanks to the Fed no longer being the buyer, and Treasury General Account replenisment needs following debt ceiling resolution, which would work to suck some liquidity off the market place.
Recession is to start in Q3, and the consumer is getting increasingly into hot water. With household debt over $17T, credit card debt not really retreating (revolving credit up 17% in Mar annualized), the stress is showing in XRT and recent earnings calls from WMT, TGT… leaving AMZN not immune either, methinks.
Don‘t forget that the LEIs I mention so often, have been declining for 13 months in a row, and show no sign of turning. Fed isn‘t happy about the GDP, real estate or job market status as relates its larger inflation ight. Stock market sellers are to retake initiative once this rally runs its course.
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Let‘s move right into the charts – today‘s full scale article contains 4 of them.
S&P 500 and Nasdaq outlook
4,154 is the first stop, and the fact we‘re reaching it with barely a move higher in USD but accompanied by significant real asset declines, means to me it would be worthwhile to not rush and instead assess the degree of buyers‘ weakness. 4,136 followed by 4,115 might not be that far, considering this is happening without any scary debt ceiling headlines.
Gold, Silver and miners
Precious metals have still ways to go, and my gold $1,930 and other