That oversold bounce

Instead of putting in at least a couple of hours upswing, S&P 500 again started selling off early in the US session. First tech, then communications, and finally a few cyclicals caved as well (financials, and then way behind energy, materials and healthcare). Heavy selling again won, and it was easy to call off the oversold bounce danger in intraday terms. Swing traders were of course unaffected – if I had to pick only two aspects why, it would be earnings (selling the news of relatively decent ones, and decreased forward guidance with especially revenue projections) and yields rising from the long consolidation called weeks ago.

Add in manufacturing recovery, easy financial conditions, strong retail sales and job market not showing many signs of stress, and then the disinflation pace slowing down (OK, there is some room still in the shelter figures ahead to help out) way above the Fed‘s intended 2% but closer to 3% inflation target leading Powell to throw cold water on the notion of cutting too much too soon (hello Sep, can it be at least you?), to complete the picture of bearish headwinds.

The current correcton is not done even if we get an oversold bounce – that would be purely technical move, and the best market participants can do, is to keep checking for signs of short-term bottom being put in. Technical indicators show that the turning point still lies ahead of us, and we‘re nearing it pretty much.

Gold, Silver and Miners

Source: www.stockcharts.com

Friday‘s action cleared up the correction risk reaching possible as far as $2,275 in favor of gradual eating through available supply. Remarkable resilience to rising yields goes on, but it must be noted that nominal yields haven‘t risen much over the last two days. Still, the cup is slightly more than half full as regtards upswing continuation.