How about a bounce?
|S&P 500 continued in the post-FOMC direction, and managed to keep above the 3,905-3,910 support. Arguably it could have done better as the bond market retreated from its meekly positive posture only before the closing bell. The buyers didn‘t stage even a dead cat bounce, and that means Friday‘s option expiry day is likely to bring donwside momentum continuation, with 3,880 coming into play should the above mentioned support be not reconquered right after the open.
While real assets held fine on Wednesday, both precious metals and commodities took a heavy daily hit – daily, it must be said. In spite of the rising volume, the dust is likely to settle before Christmas, and both gold and silver (together with copper) are finely positioned for 2023 – to be driven by rising volatility and sticky inflation. Oil is best held only as part of a portfolio with the above three, even if it can deliver a nice upside surprise, such catalyst isn‘t on the horizon, and first there would come the relief rally in USD, pressuring them all.
And this rally can happen even as long-dated Treasuries keep rising to reflect the worsening economic data from housing, manufacturing, or retail sales (the last two confirm the U.S. as firmly on the road towards recession, the subject of Monday‘s extensive article). Final point worth noting, is the continued steepening of yield curve, and worsening financial conditions. Whenever XLF and KRE don‘t do well, it‘s more than ample warning – and financials belonged to the drivers of this bear market rally, and have rolled over earlier than industrials or materials did. Not a good sight for bulls – as stated yesterday, stock market rips are to be sold.
The decreasing sensitivity to Fed rate hikes, balance sheet shrinking, and financial conditions in general, is self evident in the precious metals chart.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.