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).
Gold, Silver And Miners
Gold 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.
Silver daily downswing might not appear to confirm the bullish assessment, but I think that's a daily occurrence only.
Crude Oil
Crude 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.
Summary
S&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.