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S&P 500: More Profits Ahead

Published 02/09/2022, 12:51 PM
Updated 07/09/2023, 06:31 AM

S&P 500 bulls took the opportunity yesterday amid mild credit market support. Looks like more fireworks are to come – the risk-on turn is merely starting. Not only financials, but tech welcomed higher yields. It seems that the positive seasonality of second to third week of February is working. We have quite a way to go still on the upside – 4,600 is waiting. And it remains to be seen how far in the 4,600-4,700 range stocks make it.

Consumer discretionaries are outperforming staples, and energy isn't cratering. The brief commodities reprieve supports the stock market advance. Precious metals are rising strongly – both thanks to inflation expectations not budging much, and the expected copper upturn. Not even cryptos are plunging. The open S&P 500 and oil profits can keep on rising.

Looks like the markets are slowly positioning for yet another hot inflation number tomorrow. How many times lately have there been expectations that high CPI data would sink stocks – but these rallied instead? Thursday is likely to turn out similarly. I‘m not looking for the stock market rally to top out tomorrow. The March FOMC is still quite a few weeks away, 50bp rate hike fears notwithstanding.

Let‘s move right into the charts (all courtesy of www.stockcharts.com).

S&P 500 and Nasdaq Outlook

S&P 500 Daily Chart.

S&P 500 bulls have made the opening step, and look ready to extend gains. Even volume has returned a little, but importantly, sellers were nowhere to be seen. That will likely be the case today as well.

Credit Markets

HYG Daily Chart.

iShares iBoxx $ High Yield Corporate Bond ETF (NYSE:HYG) couldn't keep the opening gains, but junk bonds still did better than their quality counterparts. The HYG weakness looks likely to be reversed (to some degree) today.

Gold, Silver and Miners

Gold Daily Chart, With HUI And Silver.

Precious metals are firmly on another upleg. And miners strength is confirming that. When inflation turns out to be more stubborn than generally appreciated, and bond yields don't catch up nearly enough, precious metals like that. Love that.

Crude Oil

WTI Daily Chart.

Crude oil bulls paused. But the dip isn't likely to reach too far. I still wouldn't count on a pullback towards $88 or lower really. This correction is more likely to be in time than in price.

Copper

Copper Daily Chart.

Copper is clearly refusing to decline. Its upswing looks to be a question of shortening time only. Likewise, the commodities reprieve will be reversed shortly. The red metal‘s price action coupled with precious metal moves, is very nice to see.

Bitcoin and Ethereum

BTC/USD Daily Chart.

Cryptos aren't weakening. They look to be pausing in the upswing only. How long would they need to consolidate before continuing the attempt to go higher?

Summary

S&P 500 bulls have a firm grip on higher prices. We're looking at another green day today. And if it's accompanied by the turning bonds, then all the better. Tech has risen, oil is down a little, while sectoral breadth improves. The conditions are in place for the S&P 500 to overcome 4,600. The risk-on rally hasn't run out of time, and the March FOMC is still far away. Upgraded rate hike prospects are being increasingly absorbed by the markets, and stocks don't look spooked at the moment. The bears' time will come, though. But let's first enjoy the gains our timely positioning is bringing.

Latest comments

Stonks will go up...but from the viewpoint of a bat
"How many times lately have there been expectations that high CPI data would sink stocks – but these rallied instead?" Well, I suppose one less...:D
Open profits turned to open sores.
Monica will call your calls, anytime, anywhere :D
What's up, Monique? Though it's easier to tell what's down... :D
Thank you George for the many repeat messages. If you check my stock market calls performance, you would have knows that I had been both long and short this year, and you would see that the calls worked actually quite fine for subscribers. Likewise if you were reading my daily analyses, you would have known that my tone had turned more bearish than not. Please get familiar with my daily thinking, and only then post valuable insights. Everyone is welcome to check performance on my site, and the same goes for daily outlook. Including fresh portfolio highs reached, and much more.
 I care not if you've been long or short, I comment an article with all its fireworks and market love projections. Don't know if market found love, but that it found diск is certain :D Such articles could be of use for a contrarian, though.
S&P500: More profits ahead. Only....if you had open puts :D
Monica is shocked and unable to speak :D Or maybe I should post a "lovely article" response to get her attention?
Just mail me any time - anyone is welcome to do that.
Next of kin brаinwаshеd bull. As of time of writing, the index dropped 100+ points, and sinking. Though I could use her for advice after so many months of generally good predictions. Seems the drug аddiction is widespread these days though.
Hey Lady, do you enjoy the ride? Or it is a bit rough to you? :D
10y. yield hit 2%. Are u stоnеd, lady? :D
Not in the least, I had called publicly for higher figures really. Again, please get familiar with the facts first.
lovely
Thanks Vivian, turning out very fine. As I've written weeks ago though, the real gains are in the real assets. See above, and have a look, thanks!
like a red monkey аss. Splashing and smashing downhill
 I'm replying to your messages above.
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