Turning Treasuries

S&P 500 bulls stepped in before the close but credit markets show no risk-on signs of life. Instead, it appears that Treasuries are slowly but surely making the (first one to look for) turn that I talked about on Monday in the bottoming sequence. That has consequences then for the dollar as its upswing is technically weakening – the topping process looks to be getting slowly underway there. Next, tech would face less headwinds – and when we get to the puke point in the S&P 500 (there is a good enough possibility we have seen it yesterday – next couple of days would show as stocks are at times notable for early display of optimism), stocks can stage a bear market rally. Yes, I don‘t think that the selling is over as the psychological 20% downswing threshold, is about reached in the 500-strong index, and that means market participants are (subconsciously at least) looking for the Fed to „do something“ for asset valuations.

They‘re going to be disappointed – the Fed isn‘t yet backing off the tightening plans. What‘s happening is that bond markets are putting less of a pressure on the Fed to hike – yields are turning down, e.g. the 10-year is at 2.84% already. Something is telling me that the „just in time for autumn“ timing for official backing off tightening plans, is about right. What a pity that CPI isn‘t yet cooperating and slowing down its ascent markedly so as to enable some declaration of victory. The upcoming readings for May and Jun periods may be less hot than this week‘s data but the stubborn CRB Index should dial back the expectations of central banking inflation fighters. In stocks, that means a major bottom could be reached in some 5+ weeks. In real assets, that translates into very solid energy and agrifoods performance, lackluster gold and very much challenged silver and copper. Miners aren‘t yet signalling a turnaround is underway or imminent, no.

There won’t be a regular analysis featuring charts or Twitter activities today, but I’m keeping a close eye on the markets and will issue a sound commentary whenever required by the markets on my watch.

Thank you for your patience, and have a nice weekend.

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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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