PPI Preview for Stocks

S&P 500 bears couldn‘t maintain the momentum, and the buyers pulled off a fake breakout. As much as it was supported by bonds, these gave up both their intraday gains and risk-on posture in what bears hallmarks of a first refusal to go up. Not that I would be expecting any sizable upswing today, the 3,620s would provide first (easy to overcome) level of resistance. This would be tested on the initial PPI reaction – it‘s likely that stocks would try to interpret it in a bullish way before realizing that tomorrow‘s CPI is what matters more to the Fed really.

Given though the 0.4% m/m PPI and the core and y/y PPI figures balancing themselves out, stocks are obliging to the downside, which makes a fake breakout later today an increasingly moot proposition.

Therefore, today is likely to bring only modest initial appreciation struggle at best – one that would be countered during the regular session. Choppy day where any upswing would be of fleeting nature as long-dated Treasuries haven‘t kept promising intraday gains, making their stabilization still suspect. The short end of the curve still reflects hawkish Fed rhetoric and expectations – and isn‘t front running the BoE moves as regards the Fed in the least.

I‘m expecting a sticky CPI and core CPI figure tomorrow – given the price action so far, any potentially positive initial market reaction would be sold into. True, I‘m not looking for such a low CPI figure that would facilitate lasting gains – the sideways trading witnessed currently favors the bears assuming initiative tomorrow. Unless we very decisively close above my 3,635 level with outside markets confirming (unlikely to happen) – if so, I would definitely tweet about that.

Precious metals and miners‘ reversals are gently tipping the scales in the bearish direction when it comes to tomorrow. Silver and copper confirming each other on a daily basis today premarket – that‘s not a bullish sign. No matter the COMEX supplies status, silver isn‘t starting a sizable rally this week, but it‘s brewing. Remember that the white metal is a byproduct of mining for other base metals, and copper inventories aren‘t really high either.

Crude oil is likely to keep turning up – the recent shallow, flag-like correction on the daily chart is close to over, and oil stocks keep their distinct bullish posture as well. Cryptos are basing for now, unwilling to sharply move up – Monday‘s muddle through prediction for Bitcoin and Ethereum over the nearest sessions, is still playing out.

Let‘s bring up the key parting paragraph of yesterday‘s analysis:

(…) That‘s the key to any sustainable S&P 500 rally – calm in the bond markets, and end of the parabolic rise in yields. Too many moving parts though as to what kind of Q4 rally that would translate to. In such an environment, real assets are least vulnerable, and would take to any tightening pause in the kindest manner.

Keep enjoying the lively Twitter feed serving you all already in, which comes on top of getting the key daily analytics right into your mailbox. Plenty gets addressed there, but the analyses (whether short or long format, depending on market action – today short) over email are the bedrock, so make sure you‘re signed up for the free newsletter and that you have Twitter notifications turned on so as not to miss any tweets or replies intraday.

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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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