Lower GDP
TGIF -! Bulls liked the revised lower GDP Thursday and the cooler than expected PCE today.
Despite the softening of US dollar and yields - as warned in my Bloomberg interview Mon for a short-term bond and equity bounce - the violent yield curve steepener we have had past week is not bullish equities or bonds big picture. Intraday, they are buying tech on every pullback. No growth to value rotation but instead as Oil sells off below 93.50 monthly resistance (now 90), the profit taking starts to kick in for XLE components. Intraday, my USD/10Y ratio rolled over from 310 down to 298 and SVXY bounced on cue, BUT I see all of this as needing confirmation.My baseline bet as posted Wed with SVXY hitting PT:
1) Thursday we hit/bounced at SPX 4241 technical support PT (posted chart where I said "Bond and Equity bulls need to defend here")
2) Macro economic data supported my Bloomberg call that US dollar and yields pull back giving bonds and equities a bounce.
3) Thursday I posted in Chase that market makers make hay as L.I.F.O. short-duration put buyers lose after frustrated bulls lost post FOMC.
4) Now we chop. I posted my SPX Roadmap to help but honestly, we need time to digest this sharp drawdown below the 4300 put wall. If we can stay above it on today's bounce, then we will see the 4400 call wall in time. Otherwise, we break and flush down to 4231 with overshoot to 4073.
5) I will update my Intermarket analysis this weekend to see if ANY have triggered swing long. My bet: not yet. The DXY looks likely to close green on the weekly for an 11th consecutive week.
That is further supporting my gold/silver swing shorts. In fact I see gold as being "force sold" as collateral since bonds don't have the value they once did. With that, it is only a matter of time before TECH gets sold but likely not until post Magnificent 7 earnings are through, even though the bar to beat will be very low. That's still what I see in my end-of-year growth to value rotation in which volatility mean reverts higher, and where investors are incentivized/reminded to be "paid to wait" in cash/T-bills.
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