Is A September Smackdown Coming Next?
Monica Kingsley | Sep 08, 2021 10:59AM ET
S&P 500 declined yesterday, with tech holding up best. Both paper and real assets took it on the chin, and yields, together with the dollar, rose. As for greenback and Treasuries upcoming price path :
(…) Treasury yields moved up, but don't expect to see them gallop just yet. A slow and steady, orderly grind higher is the most likely trajectory ahead, and even that won't propel the dollar higher, or keep it really afloat. The greenback's support is at 91.70, and I'm looking for it to give in over the nearest weeks, which carries tremendous implications for commodity and precious metals trades. And for risk assets in general.
Precious metals, copper and oil bore the brunt of souring sentiment, with cryptocurrencies joining in the slide later through the day. But have the material facts changed? Or, is all we got just a whiff of risk-off? September is likely to be volatile, it usually is. And August had been a surprisingly calm month. You know what they say about periods of lower volatility giving way to those of higher readings: Time to buckle up.
Let's move right into the charts (all courtesy of www.stockcharts.com ).
h2 S&P 500 and Nasdaq Outlook/h2The S&P 500 downswing was value driven. Risk-on has to wait for now.
h2 Credit Markets/h2The credit market slide would have to stop before the stock market bulls can think about recovery. Yesterday's picture gives a daily scary impression.
h2 Gold, Silver And Miners/h2Higher yields and a rush into the dollar did hurt precious metals, but I'm not looking for a fresh and steep downleg to be starting here. When the momentary sense of panic calms down (it can happen relatively fast), precious metals would have an easier time rising on the monetary policy and inflation projections.
h2 Crude Oil/h2
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Crude oil ran into another setback, but the buying interest bodes well. I‘m looking for a gradual price recovery to continue.
h2 Copper/h2While copper is hurt by the weakening real economy and underperforming the CRB Index, commodities haven't rolled over to the downside – the commodities super-bull remains intact. Copper bulls are biding their time. They will likely step in on the heels of positive news out of China.
h2 Bitcoin and Ethereum/h2Bitcoin looks to have found a temporary floor, but it would be very premature to declare a fresh upswing to be about to start.
h2 Summary/h2Yesterday's risk-off day is likely to get at least partially reversed today, and I'm not looking for it to break the bull run in the stock market and commodity sector. As for precious metals and cryptos, I'm looking for their recovery to start in earnest once the dollar and yields again paint a favorable picture.
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