Is The Selling Madness About Over?
Monica Kingsley | May 14, 2021 03:47PM ET
The inflation scare amplified by CPI data died down yesterday a little. Buying returned into the S&P 500, lifting the NASDAQ Composite ever so little, too. The VIX steeply rejected moving higher, and looks ready to decline today, but the put-call ratio doesn't share the optimism of the bearish scenarios. The VIX is powered by the inflation scare forcing a deflationary outcome in an overleveraged financial system, which is emboldened by the downfall's steepness since Monday. While one swallow doesn't make a summer, the technical picture in the hardest hit tech sector is gradually improving. It is worthy of receiving the benefit of the doubt. But dance close to the Nasdaq exit door.
Credit markets have crucially improved, with the junk corporate bonds leading the way, and value stocks being soundly bought again. All it took was a decent daily stabilization in long-dated Treasuries coupled with an intraday upswing attempt. There was no issue that it fizzled out before the close, apparently. The markets are coming to terms with higher inflation , and the commodities that are being hit – starting with lumber, stretching to copper, and including oil and soybeans – will likely recover.
Negative real rates would start supporting the metals increasingly more as the decoupling from nominal yields gathers more steam. The precious metals upleg is still in its early stages, and about to add more to my open gold profits.
Crude oil would be positively affected by the anticipated rebound in commodities from the weekly setback, as these would balance out the rising yields in a way, and would do well past reflation time. Right on cue, my new oil position is already profitable.
Bitcoin had a high-volatility day yesterday, but closed almost where it opened. Tentative signs of stabilization and accumulation are here, and Ethereum isn't wasting time in returning to growth, which is a positive signal for the best known crypto.
Let's move right into the charts (all courtesy of www.stockcharts.com ).
h2 Gold, Silver And Miners/h2Gold and miners keep trading in harmony, and a new precious metals upswing is in the making. See how little an iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) uptick coincided with that turn.
Get The News You Want
Silver daily downswing might not appear to confirm the bullish assessment, but I think that's a daily occurrence only.
h2 Crude Oil/h2Crude oil dipped a bit too far yesterday, but doesn‘t appear to be breaking down. I look for more backing and filling before the upswing resumes.
h2 Summary/h2S&P 500 bulls are getting to flex some muscles. The weak retail sales aren't exactly a positive catalyst but at least it puts to rest the misguided notions of the Fed springing to action.
Gold, silver and miners are well positioned for the upswing resumption, and much of the downside indeed appears to be in already.
Crude oil meandering goes on, but without bearish overtones – the chart remains bullish.
Bitcoin has started to timidly repair the damage inflicted, while Ethereum is back to growth already. The leading crypto's position still remains murky at the moment.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.