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It‘s Only Tech That‘s Sold – Not S&P 500, Gold Or Silver

S&P 500 is getting under modest pressure, and technology is to blame. Is the correction about to turn nasty from sideways? Still no signs of that, even as the investment grade corporate bonds are being sold of as hard as long-term Treasuries. Yet, these corporate instruments have only now broken below their late Oct lows – unlike long-dated Treasuries, whose price action resembles free fall.

These government debt instruments are arguably the key asset class for every precious metals investor to watch. What used to be gentle decoupling signs over the latest weeks and months, got thoroughly tested the prior week. Yet, I stood firm in not calling gold down and out. The support zone at late Nov lows generated a rebound that was oh so likely to materialize.

Silver naturally outperformed, both copper and oil had a strong day, and agrifoods are making new highs. The inflation dynamics described in Friday‘s article aptly called Why the Sky Is Not Falling in Precious Metals, continues unabated, and the pressure keeps building inside the metals and commodities.

Not even the dollar managed to benefit from the rising yields – the resumption of its bear market I called on Feb 08, is one of the 2021 themes. Money keeps flowing from the Treasuries market, and there is plenty sitting on the sidelines (corporate or private) to still deploy and power stocks and precious metals higher. Also those ready to withstand Bitcoin volatility (hello, the weekend Elon Musk tweet follow through), stand to benefit – cryptos are behaving like a store of value, a hedge against currency debasement. I wrote in my very first 2021 analysis that the Bitcoin correction wouldn‘t get far.

Powell‘s testimony is about to bring volatility, but does it have the power to change underlying trends? Not really – while his latest high profile assessments brought about a downswing, stocks recovered in spite of the GameStop (contagion?) drama too. Should we see a replay of the above, new highs are coming – and they are, in both stocks and precious metals. We‘re in a commodities supercycle on top!

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

S&P 500 and Volatility

S&P 500

The daily chart shows yesterday‘s turn of events clearly. The volume increased, indicating that the bulls will need to grapple with more downside.

S&P 500 market breadth

Both the advance-decline line and advance-decline volume have curled noticeably, yet new highs new lows continues higher. That‘s a confirmation of the broad based nature of the stock market advance, further illustrated with the following chart.

S&P 500 equal weighted

What if all the constituent shares in the S&P 500 had equal weight (i.e. there is no $NYFANG)? The above chart is the reflection – and it‘s challenging the latest highs. The rotation theme I‘m discussing so often, means in this case taking the baton from tech, and seeing it pass to value stocks. Such broad advance is a healthy characteristic of bull runs far from making a top.


technology to semiconductors

Here is the culprit behind yesterday‘s decline – on increasing volume, technology (XLK ETF) has plunged. Yet it‘s the semiconductors (XSD ETF) that I am looking at for clues as to how reasonable has the decline been. And given how the tech is holding up, it‘s a bit accentuated.

Credit Markets

HYG:SHY vs stocks

High yield corporate bonds to short-term Treasuries (HYG:SHY) ratio is still behaving reasonably – the overlaid S&P 500 prices (black line) aren‘t accelerating to the downside. Thus far, everything keeps pointing to stocks behaving a bit more sensitively than throughout 2021 mostly, yet far from crashing or showing their readiness to. The real correction has to wait still – this is not the real deal.

Gold, Silver and Treasuries

gold and Treasury yields

Gold price action indeed proved not to be as bearish. Finally, we‘re seeing a clear refusal to move down even as Treasury yields continue to plunge. How long will this new dynamics stick, where would it take the yellow metal? I treat it as a valuable first swallow.

gold and silver

The scissors between gold and silver keep widening, and the white metal again outperformed yesterday. That‘s exactly the dynamics of the new precious metals upleg that I‘m expecting.

miners to gold - with GDX:GLD

Both depicted miners to gold ratios show a clear pattern of post Nov resilience. GDX:GLD is not breaking to new lows, while $HUI:$GOLD rejected them. Bobbing around, searching for a local bottom before launching higher? That‘s my leading scenario.


The unfolding correction got a new twist with yesterday‘s downswing in stocks, and unless tech gets its act together, appears set to run further. Emerging markets fell harder than the Russell 2000 yesterday, which is another proof that the correction isn‘t yet over.

Gold and silver price action remain encouraging, and the same can be said about oil and many other commodities. Once the stimulus bill is passed, the positive fundamentals that are going to turn even more so, given the Fed‘s accomodative policies. Will these work to stave off the rising Treasury yields as well? If so, then gold‘s fundamentals got a crucial boost, which would soon be seen in the technicals too. As I wrote yesterday, the metals didn‘t get a knock-out blow – the medium- and long-term outlook remains bright, and too many market players on the short side in the short run, means a high likelihood of a reversal – which is precisely what we saw.

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Monica Kingsley
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All essays, research and information represent analyses and opinions of Monica Kingsley that are based on available and latest data. Despite careful research and best efforts, it may prove wrong and be subject to change with or without notice. Monica Kingsley does not guarantee the accuracy or thoroughness of the data or information reported. Her content serves educational purposes and should not be relied upon as advice or construed as providing recommendations of any kind. Futures, stocks and options are financial instruments not suitable for every investor. Please be advised that you invest at your own risk. Monica Kingsley is not a Registered Securities Advisor. By reading her writings, you agree that she will not be held responsible or liable for any decisions you make. Investing, trading and speculating in financial markets may involve high risk of loss. Monica Kingsley may have a short or long position in any securities, including those mentioned in her writings, and may make additional purchases and/or sales of those securities without notice.

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4 thoughts on “It‘s Only Tech That‘s Sold – Not S&P 500, Gold Or Silver”

  1. Another excellent analysis as always, Monica! Massive loss of talent for Sunshine Profits. As mentioned in your today's analysis, "The rotation theme I‘m discussing so often, means in this case taking the baton from tech, and seeing it pass to value stocks. Such broad advance is a healthy characteristic of bull runs far from making a top." Any idea what's the ETF for "value stocks"?

    1. Dear Sandra, thank you very much… Giving real daily meaning, translating it into clients benefiting, is superior to any amount of empty, fluffy slogans. People see through that, are the ultimate judge of quality, and also have memory. Dirty tricks haven't slowed me down in growth really, and letting the world see how I am thriving regardless, without, in spite of such "partners", is the really best outcome. I am so happy that nothing stands in the way of me delivering what people, who have placed their trust with me, truly need across the markets. You have all been the only truly grateful ones, and I'll be always here for you. It also means that I'll take on outrageously off mark (precious metals and stocks) calls whenever that's in the interest of the people (and I don't care about those assured 2-3 thumbs down that accompany such individual comments), just the way I did last week at investing.com discussions such as:

      To your question – I feature in the value to growth one ETF, it's the VTV. It's unleveraged, and had a great month in Feb – meaning it could have a little harder time growing now. I view it as a portfolio component that's rather tame compared to oil and silver.

      Have a great day!

  2. Once again I express my gratitude to you Monica. It is such times when we all need your assistance in order to take decisions. It would have been marvelous if you had analyses from the Greek market too. But I think this is difficult, isnt it?
    Keep up the perfect work. Keep safe.

    1. Hi Mike, thanks, my pleasure. I'm here for the people, that's all. Thanks for all your appreciation. $ATG would interest you? Just tell me your question over email please – and I'll do it just like with oil especially and regularly.

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