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Where S&P 500 Breakout?


January 15, 2024 ( Newswire) S&P 500 again didn't manage to break above 4,835 even if the bond yields retreated. HYG though lagged behind, and Russell 2000 remained muted. The 2y yield dramatically retreated to 4.14% - a move the 10y at 3.96% didn't mirror - arguably on Yemen strukes aftermath sinking in.

Stocks though still remain in risk-on, with the mainstream rate cutting hopes being based on disinflation, on victory over inflation - just as I wrote Friday, there is higher consumer inflation and it's hinting at a 3% yoy floor following which the Fed would be pressed to pick what to do about it and slowing economic growth, but we're good two quarters away from that.

Still, stock are marching higher for a top that isn't two quarters away - the key pointer to specify would be unemployment rate, productivity and retail sales coupled with overal services PMI health. So far so good - there is no worry about inflation being or becoming sticky, and likewise (justifiably) no worry over recession or no landing in the one to two quarters ahead.

Latest earnings were a mixed bag, with JPM standing out in bearish projections while C, WFC and BLK diverged in stock price moves, indicating that this isn't the time to be bearish financials - or either of the two sectors that I'm describing in today's sectoral picks to outperform the S&P 500 over the next say 8 weeks. The weekly, daily and 4 hour charts all obviously hint at breakout.

Still, the Fed remains the greatest policy risk, with opinions about year end Fed funds rate dramatically diverging between FOMC members - while the spread was 25bp in Sep, it was 150bp in Dec, introducing significant volatility, which is part of the stock market reversal I had warned about on Jan 01. Whether we see a 25bp cut in Mar or not (odds are we do), the stock market views the glass as half full - and rate cut odds for Jan came quite back to 5.2% as well, which ain't really bearish stocks now, but the Red Sea situation would have an effect of inflation down the road.

Keep enjoying the lively Twitter feed via keeping my tab open at all times (notifications on aren't enough) - combine with subscribing to my Youtube channel, and of course Telegram that always delivers my extra calls (head off to Twitter to talk to me there), but getting the key daily analytics right into your mailbox is the bedrock.
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Let's move right into the charts (all courtesy of - today's full scale article contains 4 of them, featuring S&P 500, sectoral picks, precious metals and oil.

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S&P 500 and Nasdaq Outlook

What unfolds next, may resemble the second half of Nov, except that a deeper brief retracement is possible. This isn't though on the cards before we start approaching Friday's options expiry or Yemen truly surprises. Earnings to be reported next week, are unlikely to be bad, and I'm looking for cautious guidance to be shaken off similarly to C, and better than WFC.

Crude Oil

Crude oil likewise gave up much of the Yemen premium, but is set to recover shortly - if nothing, then on the Arctic cold spell hitting Midwest too. I can't be bearish gasoline and heating oil even if these aren't clearly rising yet - the bullish bias is there, the more economic growth gets questioned in the months ahead, together with sticky inflation recognition.

Copper is standing aside from the safe haven trades and in need of inflation liftoff to lift itself up, and in the low $3.70s it is long-term undervalued, especially considering the supply, demand and stockpiles dynamic.

Thank you for having read today's free analysis, which is a small part of my site's daily premium Monica's Trading Signals covering all the markets you're used to (stocks, bonds, gold, silver, miners, oil, copper, cryptos), and of the daily premium Monica's Stock Signals presenting stocks and bonds only. Both publications feature real-time trade calls and intraday updates.

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Thank you,

Monica Kingsley
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All essays, research and information represent analyses and opinions of Monica Kingsley that are based on available and latest data. Despite careful research and best efforts, it may prove wrong and be subject to change with or without notice. Monica Kingsley does not guarantee the accuracy or thoroughness of the data or information reported. Her content serves educational purposes and should not be relied upon as 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 a Registered Securities Advisor. By reading her writings, you agree that she will not 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, including those mentioned in her writings, and may make additional purchases and/or sales of those securities without notice.

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