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Soft Landing, Really?

S&P 500 started a brief correction on NFPs outdoing expectations, with other data confirming job market tightness as much as Dec NFPs upward revision to 260K. The resulting shift in expectations for three Fed rate hikes this year (and of course dialing back bets on those coveted cuts) sent the dollar sharply higher, and real assets down while stocks held up relatively well. Even the „broken“ VIX couldn‘t rise Friday – there is a good enough reason I haven‘t been bringing you volatility and put to call ratio metrics lately.

So, stocks are correcting, but the short-term picture is far from clear – while the defensives are refusing to decline, financials haven‘t rolled over yet (and regional banking acts still OK). Neither value nor tech reversed on rising volume, indicating that this storm could be over in a couple of days, no matter the disastrous earnings thus far (yes, AAPL and beyond the tech layoffs) bringing negative surprises to -5.3% so far.

Markets aren‘t fearing a hard recession, but stocks are uneasy – in the very short-term.The stunner creeping in is that the Fed somehow pulled it off, that soft landing – and job market data were taken as a proof, which however has consequences for services inflation even commodities, precious metals are nicely consolidating. Had been, till Friday – but that appears as a buying opportunity when deterioration in economic data sends yields and the dollar down. Summing up, I continue to think the soft landing thesis would be disproved by end of Q2 2023, and that a mild recession is ahead.

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

S&P 500 and Nasdaq Outlook

S&P 500 and Nasdaq

Higher rather than lower 4,140s held, but the dust hasn‘t yet settled. 4,105 – 4,095 is the next good support area as I think breaking back above 4,165 would take a while.

Credit Markets


Bonds will likely take a while to calm down, but junk corporate ones aren‘t yet leading to the downside. The risk appetite won‘t though return too soon – basing around current levels for today, would be a success.

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Bitcoin and Ethereum

Bitcoin and Ethereum

Ever since I published this weekend crypto chart, prices declined, and are trying to keep the daily bottom in – that would be consistent with stopping Friday‘s risk-on bleeding.

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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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