S&P 500 went up yet again yesterday, and the corporate credit markets' non-confirmation resolved itself. While the same can't be said about small caps or emerging markets, S&P 500 doesn't care. It keeps on its staircase rally without any real corrections to speak of.
There are no intraday corrections to speak of, either, unless you count the sharp and brief pre-market one yesterday before the CPI figures came out. That's the result of the sea of liquidity in practice, and the avalanche of stimuli. The 1.50% yield scare on 10-year Treasuries is long forgotten, and technology welcomes every stabilization, every retreat from even quite higher levels, and value stocks barely budge. There is no real rotation to speak of and see here, move along.
Such were my recent observations:
(…) No denying that the stock market is in a strong uptrend, but it got a bit too stretched vs. its 50-day moving average – a consolidation in short order would be a healthy move. But the CPI readings above expectations don‘t favor one today.
Talking gold prospects early yesterday:
(…) And that's probably what gold is sensing as it grew weak yesterday. The rising yields aren't yet at levels causing issue for the S&P 500, but the commodities' consolidation coupled with nominal yields about to rise, has been sending gold down yesterday – and miners confirmed that weakness by leading lower. This would likely be a daily occurrence only unless and until copper gives in and slides – that‘s because of the inflation expectations having stabilized for now, but Treasury yields not really retreating. Yes, gold misses inflation uptick that would bring real rates down a little again – and is getting one in today‘s CPI as we speak.
CPI inflation is hitting in the moment, and its pressure will get worse in the coming readings. Yet, the market isn't alarmed now as evidenced by the inflation expectations not running hot. The Fed quite successfully sold the transitory story, it seems. Unless you look at lumber, steel or similar, of course. None of the commodities have really corrected, and the copper performance bodes well for the precious metals too.
The stalwart performance in the miners goes on after a daily pause as gold gathers strength and silver outperformed yesterday. Silver miners and gold juniors are pulling ahead reliably as well, not just gold seniors.The run on $1,760 awaits.
Let's move right into the charts (all courtesy of www.stockcharts.com).
Gold And Miners
Gold isn't in a decline mode anymore, and appears picking up strength, so as to take on the $1,760s. Volume is returning, and the current reprieve in rising yields is welcome.
Miners returned to the limelight. It's my view they will lead gold by breaking above their recent highs convincingly, as the tide in the metals has turned. Time and desirably, catalysts of such move, are all that are needed. Geopolitics or more unavoidable inflation data bringing down real rates, that is what I am looking for next.
Silver And Miners
See the gold and silver miners trading in lockstep, remember gold juniors as well, and you get this bullish picture where the whole precious metals sector is slowly coming back to the limelight. In case of silver, the return in volume bedes well for the days ahead – all without the classic signs of bearish isolated silver outperformance.
Summary
S&P 500 and the still elusive consolidation – the Fed speakers won't likely trigger one today. Bulls watch out for some daily downside with little to no warning in your plans.
Gold and miners‘ paths are aligned, and nominal yields trajectory bode well for the days ahead, when patience is still needed before the nearest resistances in both assets are taken out with conviction.