Really no pivot

S&P 500 was again rejected on the upside, closing near the bottom of my 3,770s – 3,720s range aka no-man‘s land amid weakening bonds – weakening, but not yet considerably weak. The dollar though is solidly back in the upswing mode as long-dated Treasuries are flirting with the recent lows again. And that‘s especially concerning to the extended Nasdaq.

Let‘s bring up yesterday‘s thoughts:

(…) I‘m looking for still reasonably good non-farm payrolls tomorrow, which would:

(…) thus feed into the „Fed has no reason to stop tightening – there‘s enough leevay still“ narrative, so stocks should understandably decline on such a good news sinking in. Clearly the pivot / pause bets are very premature. At the same time, I‘m looking for relative resiliency in real assets – look how little oil has budged (driven by OPEC+ of course). Gold and cryptos are to dial back their upswing to a much lesser degree than silver, or copper.

What I would like to see (if the bears still have the upper hand, if the Q4 rally hasn‘t started already), is dialing back of the current risk-on sentiment in anticipation of the above paragraph outcome. If that doesn‘t happen to a meaningful degree in stocks and outside markets during today‘s session, then my hypothesis of an S&P 500 decline below the open short position‘s entry points, is toast. Given the above NFPs dynamics, I‘m willing to let the market prove me right or wrong tomorrow. The other open trades make up for that on the long side amply.

(…) market reaction I anticipate tomorrow, … is bonds down, stocks down, dollar up. By the way, cryptos are also firming here, which as positive as the precious metals performance.

How is that turning out as we speak?

The pre-NFPs hesitation confirmed with more clues right before the data release – and the reasonably positive job creation and unemployment rate figures ushered in fireworks for the bears. What felt like a waterboarding week, is drawing to a fine close – I‘m looking for the selling pressure to pick up somewhat still, and for a close decisively below 3,720s. Bonds yields and the dollar would confirm the weakness, pressuring tech and also cyclicals. VIX would rise, but not to panic levels while cryptos and real assets with the exception of crude oil, retreat modestly.

Let‘s see first bears overpowering any buy the dip right after the open.

I‘ll be updating you through the day as we go – happy weekend in advance!