The Market Upswing Is Far From Done

S&P 500 reversed the pre-FOMC decline, and turned up. The upswing didn‘t fizzle out after the conference, quite to the contrary, the credit markets deepened their risk-on posture. I guess stocks are buying the story of 7 rate hikes and balance sheet reduction in 2022 a bit too enthusiastically. Not gonna happen, next quarter‘s GDP data would probably be already negative. Yet Powell says that the risk of recession into next year isn‘t elevated – given the projected tightening, I beg to differ.

But of course, Powell is right – it‘s only that we won‘t see all those promised hikes, let alone balance sheet reduction starting in spring. Inflation would retreat a little towards year‘s end (on account of recessionary undercurrents and modest tightening), only to surprise once again in 2023 on the upside. I already wrote so weeks ago – before the East European events. There wouldn‘t enough time to celebrate the notion of vanquishing inflation.

For now, stocks can continue the bullish turn – just as commodities and precious metals aren‘t asking permission. The FOMC is over, and real assets can rise, including the badly beaten crude oil. Made a good decision to keep adding to the commodities positions at much lower prices (or turning bullish stocks around the press conference).

Related: Quantitative Tightening: The Potent but Underappreciated Sister of Interest Rate Hikes

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

S&P 500 and Nasdaq Outlook

S&P 500 and Nasdaq

S&P 500 upswing looks like it can go on for a while. It was driven by tech, participating more enthusiastically than value. The conditions are in place for the rally to continue, and it‘s likely that Friday would be a better day than Thursday for the bulls.

Credit Markets


HYG is catching quite some bid, and credit markets have turned decidedly risk-on. It also looks like a sigh of relief over no 50bp hike – the stock market rally got its hesitant ally.

Gold, Silver and Miners

gold, silver and miners

Precious metals upswing can return – and this correction wasn‘t anyway sold heavily into. Needless to say how overdone it was if you look at the miners. $1950s would be reconquered easily.

Crude Oil

crude oil

Crude oil bottom looks to be in, and $110s are waiting. Obviously it would take more than a couple of days to return there, but we‘re on the way.



Copper is rebounding, and even if other base metals aren‘t yet following too enthusiastically, $4.70 isn‘t far away. Coupled with precious metals returning to more reasonable values, the red metal would continue trending higher.

Bitcoin and Ethereum

Bitcoin and Ethereum

Cryptos are leaning risk-on, and the bulls will close this weekend on a good note. Today‘s price action is merely a consolidation in a short-term upswing.


S&P 500 bulls got enough fuel from the Fed, and the run can continue – albeit at a slower pace. Importantly, credit markets aren‘t standing in the short-term way, but I think they would carve out a bearish divergence when this rally starts topping out. I‘m not looking for fresh ATHs, the headwinds are too stiff, but as stated within today‘s key analysis, the tech participation is a very encouraging sign for the short-term. The dollar indeed didn‘t make any kind of upside progress to speak of yesterday – and as I have also written at length in yesterday‘s report, the pre-FOMC trading pattern in real assets can be reversed now. Long live precious metals, oil and copper gains!