SPY Corrects in Breadth

Good shallow ES downswing opportunity was lost yesterday premarket – and the almost neutral manufacturing data didn‘t force buyers to waver. The key sectors I‘ve been highlighting lately so often, had done really well, and the table is set for expansion in breadth following retail sales. The latte session ambush from Monday doesn‘t change that.

Risk assets are performing nicely, and especially precious metals are showing the way for today while crude oil held my support level and would also peek higher alongside copper.

Quoting from yesterday‘s extensive analysis as regards retail sales:

(…) The still very expansionary fiscal policy is to also to contribute to the resilient consumer, and nominal retail sales wouldn‘t do poorly – discretionaries would see internal rotation while staples would come to the fore as inflation returns – it‘s a question of when, not if.

For now, even banks are starting to look bright – JPM and other earnings weren‘t at all bad. And even if Q4 earnings estimated for the whole of S&P 500 are too optimistic in my view, the improving market breadth and solid rotations both into non-tech and inside tech when Fed hawkishness is disregarded, doesn‘t provide the necessary ingredients for a steep or lasting selloff over the nearest weeks – these are to bring rather good XLI showing after industrials didn‘t break lower in May (and this applies to non-US manufacturing too), XLB and XLE are to keep improving together with XLF that didn‘t break lower following the Mar banking troubles.

This S&P 500 rally is becoming a rally of more than Top 7 stocks, and it‘s getting entrenched as the disinflationary data aftermath showed. Sure, it‘s on the very optimistic side, coupled with key breakdown in USD below 101-102 without really looking back.

I‘ve discussed much more in Sunday‘s extended video taking 17min, just check it for fiscal policy prospects meeting still tight Fed and earnings projections especialy as regards Q4 – Fed that won‘t cut rates any time soon, and will have to face returing inflation in autumn.

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Let‘s move right into the charts (all courtesy of www.stockcharts.com) – today‘s full scale article contains 5 of them.

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Gold, Silver and Miners

gold, silver, miners

Precious metals are primed for a move, and odds are it would lead them higher – the only question is whether that happens already today, or would take a day more. I‘m favoring today.

Crude Oil

crude oil

Crude oil buyers stepped in early, and $73.50 – $74 level held. Commodities and waking up, and copper is also likely to recover yesterday‘s setback in short order.

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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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