S&P Looks To Extend Gains
Monica Kingsley | Jun 25, 2021 12:27PM ET
The S&P 500 powered higher after the daily pause, yet its solid gains don't have such a risk-on feel as the credit markets do. Depending on tech heavyweights for the lion's share of gains isn't an immediate concern. The market breadth is slowly improving after value stocks were bombed out post-FOMC. Signs of life are returning, facilitated by the Fed's $8.1 trillion reasons to celebrate.
As tech-reliant as the S&P 500 is, the path of least resistance is still higher. And in the same way (tight trailing stop-loss) the NASDAQ Composite could be approached too, so as to protect our open profits while letting them grow.
PCE deflator readings often come below CPI, thanks to the "weighted substitution effect" at play, and it will come back to haunt the Fed. Taken to extremes, you downgrade from a steak to a hamburger, and then what? Cat or dog food? Obviously, this measure is favorable to the Fed as it defers the taper speculation further to the future.
Together with the redefinition of how long transitory means now, the central bank wins in leaving the punch bowl available for longer. If last week gave us any lesson, it was that market players are all too quick to sell both the winners and losers. The spike in Treasuries was a clear warning sign of stress.
Gold and silver keep basing. Not even silver is inspired by CRB. First stocks, then commodities and finally precious metals will recover from the tightening speculation.
The greenback missed an opportunity to rise. USD/JPY also hasn't been trading favorably to the yellow metal lately. Again, gold is spending too much time at its recent support, while silver isn't showing signs of life. The miners-to-gold ratio isn't taking initiative either.
Crude oil keeps trading with a bullish outlook, and oil stocks have a great future ahead. The intraday and upcoming volatility might not be always pleasant, but black gold is far from making a top.
Cryptos' base building hypothesis hasn't been invalidated, but the current downswing better gets solidly retraced, otherwise we're in for another hot weekend.
Let's move right into the charts (all courtesy of www.stockcharts.com ).
h2 Gold, Silver And Miners/h2Gold and miners keep going nowhere. There is no momentary sign of strength, just temporary stability. A bigger move is coming.
h2
Get The News You Want
Silver isn't yet leading gold, and the copper leadership is thus far being lost. Precious metals are obviously afraid of tightening, and have been hurt hardest in last week‘s liquidation.
h2 Bitcoin And Ethereum/h2Prices are again approaching the danger zone.
h2 Summary/h2The S&P 500 led by Nasdaq looks set to extend gains, and the leadership supporting the advance will broaden.
Gold and silver still haven't regained short-term bullish momentum, and the longer they fail to do that, the more precarious their position in this long base building.
Crude oil seesaws in the short run, but the consolidation is likely to be resolved with higher prices, and oil equities rising again.
Bitcoin and Ethereum bulls better step in, and vigorously defend the 32,500 before the bears‘ appetite increases.
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.