Selling pivot hopes
|NFPs again above expectations yet prior readings revised solidly lower, brought about the initial S&P 500 spike that was decisively sold into. Not worth celebrating that there won‘t be Sep rate hike after all. Yields though welcomed the figure, and 10y surged back to 4.20%. Financials with industrials held especially well – and materials with energy doing fine was also to be expected – the worst of the commodities downswing is over. Tech alternating between positive and negative on the day, was actually an achievement – that discretionaries and communications didn‘t do nearly as well, is a warning sign to the tech bulls as we enter the holiday shortened week.
As much as Thursday‘s job was rejection of any breakout above 4,529 – 4,535 zone, Friday was about closing below 4,515. This key support held, but given that market breadth improvements are concentrated in tech, the close of 4,519 can still be thoroughly tested when realizations of still tight Fed, perhaps raising in Nov and definitely not cutting any time soon, come back into focus. Also the relief over the real economy being more resilient than expected, seems to me overdone – no matter whether US enters recession before Dec 2023 or thereafter.
Russell 2000 still isn‘t leading the upswing, and actually had been rejected at $190. Also the still very much inverted yield curve is hanging over as Damocles sword.
S&P 500 and Nasdaq outlook
Source: www.stockcharts.com
Friday is more of a serious wobble than outright reversal. Financials and industrials need to join in correcting to give the downswing more power, but it‘s understandable that they didn‘t in the goldilock / maybe down the road accelerating economy (no, it would meet recession instead).
4,515 still remains unbroken on a closing basis, and it takes a fresh push in yields that would help Nasdaq dive below, and take value and cyclicals alongside. 4,492 is still closer than 4,535 given that Friday can be taken as „pivot celebration“, without the pivot.
Credit markets
Source: www.stockcharts.com
10y yield isn‘t done rising, but would be rejected and sliding to 4% right next, all within a larger move well above 4.50% next year.
Gold, Silver and Miners
Source: www.stockcharts.com
Precious metals have indeed entered the brief correction, and gold volume shows it won‘t be over immediately. Still, the resiliency vs. both yields and dollar is very apparent, and boding well for upswing continuation where $1,980 awaits maybe not only in Dec contract, but can be approached in XAUUSD too.
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.