S&P 500 bears proved they hold shorter end of the stick, just like I warned early in the European session yesterday, and my aftermarket conclusions confirmed that. It‘s that bonds turned really risk-on on a daily basis, and market breadth very much improved, which means that this rally can and will go on to challenge 4,115 – and not even a hotter (above 0.4%) core PCE figure tomorrow would derail it.
Q4 2022 hedge fund letters, conferences and more
Even if unemployment claims aren‘t yet surging sharply, recession is approaching. It‘s the tight(ened) bank lending standards, reprieve in real eastate based on mortgage rates retreat (helping with consumer confidence and retail sales as there are still some excess savings to burn through) about to end, and the improving 10 over 2y yield spread, that are signalling approaching recession while LEIs continue declining.
Russell 2000 could have been stronger really yesterday, and several big tech names (incl TSLA which isn‘t though classified as tech) are slowly struggling (this is medium-term view only) as much as crypto has some bearish divergences in the making.
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Let‘s move right into the charts (all courtesy of www.stockcharts.com).
S&P 500 and Nasdaq Outlook
The buyers won‘t give up today either, and 4,039 shouldn‘t come into jeopardy in the least (4,015 if the going gets really tough, which it won‘t till tomorrow‘s core PCE). The bulls will likely deal with existing minor non-confirmations while not creating fresh ones today. 4,115 target approaching.
Credit Markets
Bonds aren‘t to turn risk-off today, and would pose no obstacle to the stock market bulls. What‘s interesting though, is the short end of the curve, and the evolution of bets on the Fed tightening to not only be over soon, but to turn into rate cuts (seeing an emergency one in Jun or so, is though terribly misguided in my view).
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