Whiff of risk-off next

S&P 500 indeed overcame 4,520, but wavered at the same time – tech didn‘t rise. Volatility though remained meek, inching ever closer to 15, and the option traders also look a bit too complacent at the moment. A modest correction of recent sharp gains is the most likely scenario, especially since rising yields didn‘t sink tech even on a daily basis. Inflation expectations though have risen again, and that‘s a tailwind for precious metals, which have taken advantage thereof just as much as of the declining dollar. The yesterday discussed dynamic of yields – inflation – inflation expectations and by extension the dollar, is playing out.

So, the open S&P 500 long position remains solidly profitable while precious metals posture is improving, and commodities are entering a brief consolidation. Still, yesterday's open oil position is nicely in the black too, let alone crypto ones.

Remembering yesterday‘s words:

(…) Coming full circle to precious metals, all that‘s needed is one serious Fed policy misstep. Just imagine if they didn‘t deliver on Nov taper, or if the rate-raising speculation was promptly snuffed while inflation fires just kept burning (no, this can‘t be blamed on supply chains really). The Fed is though well aware of market expectations that they themselves had been feeding since Jun.

Still, they‘ll in my view easily make the Monday discussed intentional „mistake“ of attempting to pretend readiness to deploy tools to fight it (pretend is the keyword), and finally, spin inflation as something good.

Let‘s move right into the charts.

S&P 500 and Nasdaq outlook

S&P 500 gapped a little higher again, but has met some selling into the close – consolidation looks to be ahead.

Credit markets

Credit markets are still risk-on, but likely to take a breather, and that‘s likely to entail a pause in rising yields.

Gold, silver and miners

Gold and silver are swinging higher, and miners are on the move too – $1,800 awaits again. Should a whiff of risk-off indeed arrive, look for silver to waver more than gold.

Crude oil

Crude oil intraday dip was again bought – too much and the lasting downside isn‘t yet to be expected really. It‘s likely to remain a primarily sideways move before another upswing.

Copper

Copper smartly recovered, but perhaps a bit too fast – the prior two days‘ hesitation though means it won‘t likely keep the downside in check as well as oil did.

Bitcoin and Ethereum

Crypto gains are being consolidated, and the bears are finally stepping in – the lower knot shows that a downswing targeting $62-60K in Bitcoin might very well develop.

Summary

Stocks are likely to consolidate prior sharp gains before taking on the ATHs. Depending upon the credit markets risk-off breather I anticipate, the S&P 500 might retreat noticeably below 4,520, but this wouldn‘t mean the end of the upswing. The overall momentum remains on the bulls‘ side, including in commodities undergoing a brief (oil and copper) consolidation. Gold was indeed waiting for a dual confirmation of declining dollar and nominal yields, while silver wasn‘t cautious – and it shouldn‘t as the white metal would be leading this unfolding upswing. Finally, cryptos' daily hesitation is adding to the mounting risk-off move odds.