The Rise of Precious Metals and Commodities / Commodities / Gold and Silver 2021
S&P 500 closed Friday on a strong note, and as theholiday-shortened week is usually accompanied by positive seasonality, it wouldbe reasonable to expect extension of gains. Is therre any show stopper at themoment? Credit markets are strong and in a risk-on mode – but what about theodd strength in long-dated Treasuries? Are the stock traders getting it right –or the bond ones? Remember that such divergencies can take a long time toresolve, and don‘t require immediateaction. It‘s the same with the Industrials and Transports in the Dow theory. So, don‘tjump to S&P 500 bearish conclusions just yet.
The stock market advance is characterized by improvingmarket breadth, and a fresh push of reflationary trades. It would have been alltoo easy to lose one‘s cool post the June FOMC, and declare value to havetopped – while tech amply helped by heavyweights powers the S&P 500advance, value performance ain‘t too shabby. Even financials are weatheringrelatively well the retreating yields pressure, counterbalanced by the Fedrelaxing share buybacks and dividend rules. Real assets including energy aresurging again, and the Fed‘s bluff is being called.
Little wonder when all the central bank did, wasinfluence inflation expectations, and precisely nothing about current inflation– let alone pressures in the pipeline. I‘ve discussed the cost-push pressures building up,leading to inflation becoming unanchored. Add job market pressures beyond thedifficulties in hiring, and the issue grows more persistent. While it‘s notbiting overly noticeably for the financial markets to take notice the way theydid in Mar and early May, left unattended, inflation would come to bite in thenot so distant future. The takeaway is thatwith the constant redefinitions of what transitory should mean now, the conceptof Fed as inflation fighter is subject to well deserved mockery.
Look for the lull in Treasury market to continue, it‘salmost goldilocks economy as the monetary and fiscal support rivals wartimefooting circumstances. Makes you wonder what would be on the table if we werefaced with a recession. Thankfully, that‘s not on the horizon – we‘re in multi-year economic expansionathat won‘t end with the tapering or tightening games this year or next, not inthe least.
As I wrote on Friday, thinkingalso about the value strength:
(…) accompanied by the Treasury yields‘ inability toretreat further. Near the top of its recent range, the 10-year Treasury yieldis trading within the summer bond market calm atmosphere, and so are the beatendown inflation expectations at a time when the dollar is catching a strong bid.
Notably, commodities haven‘t been derailed in the least,so pay no attention to lumber – the real assets‘ world is much richer andprofitable.
Remember the big picture – fiscal stimulus very much on,monetary accomodation aggressive, no worries about the economic expansionslowing down. Pickup in economic activity associated with inventoriesreplenishment is sure to be kicking reliably on. Open long profits in theS&P 500 and Nasdaq can keep growing!
Precious metals are duly reacting today to the pressures togo higher, building up for weeks. Look for miners to confirm the upswing thatisn‘t going unnoticed in the commodities arena either.
Crude oil took off on the absence of OPEC+ deal, but I amlooking for it to base in the $70s before we see triple digit crude prices nextweek. The Brent crude lag looks a bit suspicious to me, so a little breathermight be in order here.
Crypto bears are getting a beating, with the oddsfavoring upswing to continue – the Ethereum outperformance of Bitcoin isconducive to the accumulation thesis I had been mentioning for weeks.
Let‘s move right into the charts (all courtesy of www.stockcharts.com).
S&P 500 and Nasdaq Outlook
S&P 500 is going higher, and so is Nasdaq. Thedecreasing volume might usher in a little consolidation over time but there isno imminent reason to call for one today.
Credit Markets
Technology and Value
Tech is up, value is up – what else to wish for?Defending the gained ground, that is.
Gold, Silver and Miners
Gold is attempting to go higher, and based on theyield-inflation spread getting ever more compressed and a tad off inflation expectations, I‘mlooking for miners to confirm the upcoming gold advance.
Silver and copper are alsobuilding energy to go higher, and it‘s my view they would surge to recapture agood portion of the post FOMC decline before taking a breather.
Bitcoin and Ethereum
Strong base building in the cryptos continues, and thebulls have the tactical advange at the moment.
Summary
S&P 500 keeps trading near its highs, with a bullishbias, characterized by sectoral rotations and improving market breadthincluding in Nasdaq. A little sideways consolidation appears looming, but I amlooking for a positive week.
Gold andsilver bulls are getting ever more strongly on the move, and Friday‘s upperknot is a preview of things to come – the depressed nominal yields withunrelenting inflation are helping attract buying interest.
Crude oil enjoyed more than its fair share of good news,but remains bullish today‘s tremors notwithstanding. Great future ahead forblack gold, the Saudi Arabia – UAE spat regardless.
Bitcoin and Ethereum bulls are the favored side thesedays as the weekly charts posture isn‘t yet in jeopardy. The basing patternlooks to be one of accumulation rather than distribution.
Thank you for having read today‘s free analysis, which isavailable in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, whichfeatures real-time trade calls and intraday updates for both Stock TradingSignals and Gold Trading Signals.
Thank you,
MonicaKingsley
Stock Trading Signals
Gold Trading Signals
www.monicakingsley.co
mk@monicakingsley.co
* * * * *
All essays, research andinformation represent analyses and opinions of Monica Kingsley that are basedon available and latest data. Despite careful research and best efforts, it mayprove wrong and be subject to change with or without notice. Monica Kingsleydoes not guarantee the accuracy or thoroughness of the data or informationreported. Her content serves educational purposes and should not be relied uponas advice or construed as providing recommendations of any kind. Futures,stocks and options are financial instruments not suitable for every investor.Please be advised that you invest at your own risk. Monica Kingsley is not aRegistered Securities Advisor. By reading her writings, you agree that she willnot be held responsible or liable for any decisions you make. Investing,trading and speculating in financial markets may involve high risk of loss.Monica Kingsley may have a short or long position in any securities, includingthose mentioned in her writings, and may make additional purchases and/or salesof those securities without notice.
© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.