Gold shines bright: Leading the recovery amidst emerging bearish trends

S&P 500 refused to keep the advance of course, and then the BoJ tiny hike – will it though be able to save stock market bulls when MSTR wildly swings to $1,500 and Bitcoin is now only $62,500? These metrics of risk taking as much as poor sectoral breadth (XLE is your refuge on the long side – don‘t be fooled by XLC putting in a great day yesterday (communications are to give up quite some of those gains fast) – tech performance was really weak, and will continue being so, with NVDA among the last to fall (first $880 then $860 with a pit stop at $870).

Bottom line, Friday‘s opex weakness was overcome Monday, but I don‘t give the coming days odds of returning price action above 5,225. This is how I summed up the BoJ implications in our channel earlier today – and it‘s the overall complacency of „this could have been worse“, that‘s most dangerous on the tail side of things, i.e. S&P 500 dropping by say one or two dozens of points very fast.

Way more details as usual in the chart section, Telegram and Twitter – just to remind you of Sunday‘s extensive analysis – appreciate the dollar coiling up as a sign of growing danger for risk taking as EURUSD continuing decline highlights.

(…) If in doubt, consider the barely there USD upswing Friday – good daily consolidation but once again 103.50 strong resistance called months earlier as a trouble maker not permitting the index getting far away from, looms – maybe 104 with backing and filling before slowing economy comes more into spotlight, ushering in implicit bets on Fed support of the economy to make a difference before Nov. Before that, higher for longer will reenter popular vocabulary some more.

BoJ is also set to start policy normalization in Apr as I called it to mid winter, and USD performance reflects stark deficit spending outside of a recession. It‘s though rather the more accommodative ECB mindful of eurozone economies flirting with recession, and yet EURUSD is still higher than where it was mid Feb – thanks to still easy global liquidity that would keep a lid on dollar appreciation.

No outhawking the Fed, and indeed there is room for a hawkish, not dovish surprise on Wednesday – fear not though more rate hikes, the disappointment would come on the rate cuts uncertainty front.

The S&P 500 correction barely started and has longer to run.

Let‘s move right into the charts  – today‘s full scale article contains 3 of them, featuring S&P 500, precious metals and oil.

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Gold, Silver and Miners

While gold is best insulated against the budding bearish move, it‘ll recover earliest from the risk-off turn. A more solid move into $2,140s is possible, but that‘s as far as a reasonable consolidation (purely technical and not confirmed by intermarket odds in my view) target is – I‘m not in favor of any 38.2% Fibonacci targets of $2,115 roughly, and instead expect recovery after FOMC.

Crude Oil

Oil didn‘t and isn‘t to offer many dips – the path of least resistance is higher, and XLE with oil names the refuge of those who have to pick something to remain long in the stock market.