The Creeping Realization About Inflation is Hitting the Markets

S&P 500 stopped consolidating in the 4,340s shortly after the open, and went largely one way since – except for the run up to the closing bell, which I used to grab short profits off the table. The overnight pump is at work today – not vigorously, but still. Given the credit market posture (yields not rising much on the day), a brief retracement in tech can be expected – especially since yesterday‘s outage news were what powered it in the first place.

VIX has gone nowhere yesterday, and looks unwilling to spend much time below 21 really. We‘re at crossroads where the supports I mentioned on Thursday, are giving way one after another. 4,260s are next in line, followed by 4200s – it would take time to get there, and Friday‘s non-farm payrolls  could be the catalyst. Unless they come in outrageously weak, the Fed is likely to announce taper in Nov – monetary policy deceleration into a weakening economy while inflation expectations are rising, supply chains increasingly strained to the point that the International Chamber of Shipping has issued a red alert warning of a global transport systems collapse – make you go hmm.

Something tells me the Fed won‘t be as successful jawboning inflation as in June – its favorite metric, the PCE deflator, isn‘t yielding, and the realization that inflation is here to stay, is creeping in. I don't know how so much of the financial universe could have been duped by the transitory narrative... for so long.

The energy squeeze is on – I cashed in sizable oil profits yesterday (check at my site the portfolio performance at fresh highs!) – the dollar is stalling, cryptos are rising and adding to open profits too, while precious metals are waking up. I‘m looking for silver to lead and be more resilient – the gold to silver ratio falling first below 73 would be a welcome confirmation of the budding broad recognition of inflation across the markets.

Let‘s move right into the charts (all courtesy of

S&P 500 and Nasdaq Outlook


S&P 500 volume doesn‘t show the buyers are serious here. This downswing isn‘t over.

Credit Markets


HYG was really weak yesterday, but the quality debt instruments positioning hints at a reprieve, at a risk-off led S&P 500 pause next.

Gold, Silver and Miners


Gold and silver upswing was finally joined by the miners – the sentiment is warming up to further gains.

Crude Oil


The crude oil elevator hasn‘t stopped yet, but I wouldn‘t be surprised by a consolidation of gained ground next.



Copper upswing was a bit too readily sold into, and the volume wasn‘t stellar. This long sideways trend isn‘t over yet.

Bitcoin and Ethereum


Bitcoin and Ethereum are approaching the early Sep highs – and look likely to overcome them.


Stock market bears still have the upper hand, and credit markets are signalling caution. None of the intraday reversals to the upside have stuck, and we haven‘t reached a local bottom yet. Coupled with the stagflationary undertones, the cyclically sensitive commodities have a harder time than oil. The dollar is likely to come under increasing pressure, which would underpin precious metals and commodities alike.

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Related: Sharp Market Turns Not To Miss

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