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The squeeze

Commentaries & Views

&P 500 shook off both unemployment claims below expectations and 50bp ECB hike, and the formerly disastrous market breadth got a thorough revamp, leading me warn twice of more intraday upside. 3,945 then indeed failed, and the resulting entry to the European session together with outside markets left bulls in a good place to extend short-term gains (before attending to the bigger factors that make me to keep bearish medium-term outlook).

Summing up, the sectoral view is far from conclusive, cyclicals are lagging, and tech with semiconductors rally against the backdrop of yields having trouble to further retreat. Makes for a volatile mix on the opex day.

The bulls are fumbling premarket – it's a question of time when the imbalances of the daily rally help the bearish outlook take over irrespective of the liquidity thrown at the key problem enabling the banking system issues – risk-free rate of return making for deposit outflows, which in turn necessitate parking underwater Treasuries at the Fed. See chart courtesy of to illustrate the S&P 500 internal imbalance (on top of reading the sectoral take within hyperlinks).

Gold and silver with miners are to benefit foremost, and I'm not looking for any meaningful downswing (especially in gold), no matter the mineres performance. Copper is to keep outperforming crude oil – this laggard of the commodity space for months, is still in for some serious battles around $66, justifying my Nov 2022 calls that it's worth holding only as part of a portfolio / spread. It's clearly afraid of the worsening data leading to Q3 recession.

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