Where Are The Fireworks?
Monica Kingsley | Sep 14, 2021 01:03AM ET
Stocks and credit markets gave up promising opening gains, and it was only commodities that had a really good day yesterday. The S&P 500 is starting to run into headwinds, not because of taper expectations, which appear to have been delayed until November/December, but thanks to inflation. When you start to see technology heavyweights roll over to the downside, it‘s time to pay attention.
Stagflation would be a powerful environment to facilitate a stock market decline. Real assets are positioned to reap rewards as costs push inflation higher. Add in some supply chain disruptions which are unlikely to be resolved this year, and you end up with commodity appreciation – resulting in nice profits in oil and copper.
My total portfolio performance chart is at a fresh high!
Let‘s move right into the charts (all courtesy of www.stockcharts.com ).
h3 S&P 500 and NASDAQ Outlook/h3Bears took the opportunity, and managed to close quite a few opening gaps on Friday. Would the 50-day moving average again cushion the downswing?
h2 Credit Markets/h2Credit market turned sharply lower, and the only encouraging sign, is the lack of volume when compared to the prior upswing.
h2 Gold, Silver and Miners/h2Gold and silver are stable in the very short run, and may still surprise on the upside. However bleak the miners to gold ratio looks like, precious metals are approaching the September FOMC disappointment, as we don't expect the Fed won‘t taper then – and that equals rallies in metals. Meanwhile, inflation keeps biting, and real rates are dropping.
h3 Crude Oil/h3
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Crude oil predictably rose, erasing the poor US inventories‘ effect. Oil stocks performance is actually reasonably strong given the broad stock market slide – black gold can keep on surprising on the upside.
h2 Copper/h2Copper played strong catch up to the CRB Index, and on heavy volume. This is as bullish short-term as it gets.
h2 Bitcoin and Ethereum/h2Bitcoin and Ethereum downswing is approaching juncture – will Bitcoin break below the September lows? The $44,000 level is once again key, but I‘m looking for any bearish move to be invalidated, and for the golden cross to happen.
h2 Summary/h2Risk-on was selective on Friday, with real assets outperforming paper ones strongly. Such a dynamic is likely is likely to carry over to the week just starting as a crucial test awaits S&P 500 – and it appears the stock market dip will be bought once again.
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