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Slight Risk-Off Pause In Bonds

S&P 500 continued lower as the 4,010 recapture attempt failed and 3,980 couldn‘t hold. Rejection at 200-day moving average, with prices down over…

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This article was originally published by Value Walk

S&P 500 continued lower as the 4,010 recapture attempt failed and 3,980 couldn‘t hold. Rejection at 200-day moving average, with prices down over a 100pts makes for more than a short-term setback – I‘ve been clear that the opening part of Dec isn‘t yet time to be wildly bullish.

These weeks, we‘re searching for a local low in order to take the final 2-3 weeks of Dec into early Jan by the horns. Odds are still good for Santa Claus to come by.

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But what about this week? Key to be nimble as we move between the 200-day and 100-day moving averages. Yesterday‘s momentum play provided such a brief opportunity, and now it‘s about the overnight rebound fizzling out again or not. Both dollar and bonds changed sharply direction intraday, and favor retracement of prior downside, but I can‘t be buying it really just yet.

The key catalyst to look for in terms of upside fuel, is Friday‘s PPI that‘s likely to show slowdown in inflation, and then Tuesday‘s CPI probably to come at 7.5 or 7.6% YoY, which would once again (in both cases) feed into the “Fed would now really go slow on tightening aka pivot” angle that markets are way too willing to run with.

Willing as in misguided, because the Fed isn‘t getting less restrictive at all – see rate hiking and balance sheet shrinking combined, effects to play out still. No better indicator of demand destruction to come than the price of oil really – sign of caution.

Keep enjoying the lively Twitter feed serving you all already in, which comes on top of getting the key daily analytics right into your mailbox. Plenty gets addressed there, but the analyses (whether short or long format, depending on market action) over email are the bedrock.

So, make sure you‘re signed up for the free newsletter and that you have my Twitter profile open with notifications on so as not to miss a thing, and to benefit from extra intraday calls.

Let‘s move right into the charts (all courtesy of www.stockcharts.com).

S&P 500 and Nasdaq Outlook

S&P 500 SPX

Volume picking up, and unless S&P 500 reclaims 3,965, the daily outlook remains bearish – and that preliminarily goes for tomorrow as well. Downside targets in case the bond upswing fizzles out today, are given in the opening part of the article.

Credit Markets

HYG

Something is wrong with HYG – I don‘t see junk corporate bonds recovering through Thursday. Much work still ahead to turn bonds risk-on, no matter precious metals and commodities today (looks more a function of the dollar daily decline).

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Turn notifications on, and have my Twitter profile (tweets only) opened in a fresh tab so as not to miss a thing – such as extra intraday opportunities. Thanks for all your support that makes this great ride possible!

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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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