What a week it was, with S&P 500 closing Friday on a weak note. Is the downswing about to continue, or getting exhausted and in need of some rest? I’m leaning towards the latter – we’re in for a pause in selling, and a rebound is due. Quite a few signs are pointing in this direction, starting from credit markets, value and finally the beaten tech. The upswing could have actually developed (in the form of at least sideways day with peeks higher getting rejected) on Friday, but that wasn’t the case – the attempt right after the open ran out of steam relatively fast. Still, open short profits were taken off the table, and a fresh portfolio high was reached!
The table is set for S&P 500 to rise, and for bonds to rally a little. And that wouldn‘t be the result of war tensions lifting up Treasuries, gold and oil. Red hot inflation, decelerating growth and compressing yield curve are a challenging environment, and the odds of a 50bp Mar rate hike are overwhelming, but the Fed‘s balance sheet is still rising – now within spitting distance of $9T. Sure they will take on inflation, but I continue to think that by autumn they would be forced to reverse course, and start easing. Fresh stimulus after markets protest during 1H 2022? Would be helpful for the midterms…
Precious metals are looking very strong, and the upswing is getting underway while crude oil remains fairly well bid – and it would be black gold that decides the fate of the discredited transitory inflation thesis. The pressure on cryptos continues over the long weekend, so the open profits there can keep growing as well. If I were to highlight one key point for the next week, it would be the S&P 500 upswing attempt supported by credit markets action – that attempt would though ultimately fizzle out, and stocks would turn south again.
Stay tuned for Monday’s extensive analysis, and have a nice rest of the weekend.
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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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