It was a bullish month for US equities, SPX +96pts (2.6%) to 3811, with the Transports +1243pts (10.3%) to 13331. WTIC settled +$9.30 (17.8%) to $61.50. Copper settled +54cents (15.1%) to $4.09. The USD settled +31bps to DXY 90.88. The US 10yr yield settled +33bps to 1.44%.
SPX, monthly
Trans, monthly
WTIC, monthly
Copper, monthly
USD, monthly
US 10yr yield, monthly
Summary
Equities: On any basis, with all the major indexes breaking new historic highs, it was a bullish month for US equities. The SPX printed 3950, and whilst the month ended on a weak note, it was still a net positive month, as the m/t trend remains comfortably intact.
Commodities: It was another bullish month for the key commodities of WTIC and Copper. WTIC is already near big target of $65/66s, and talk of giant psy’$100 is no longer crazy. Copper printed $4.38, which isn’t far from the 2011 hist’ high of $4.65. A push to psy’ $5.00 appears due this spring, as the $7s look viable by late summer.
USD: The dollar leaned upward into end month, making for a net monthly gain of +0.3%. However, the m/t trend remains bearish. I would note the 10MA at 93.23, and that will drop/adjust to the 92s as of next Monday. An eventual loss of the key 88s would merit alarm bells, and offer next support of 80/78. If seen… massive bullish implications for almost everything, not least commodities.
Bond yields: The US 10yr printed a new cycle high of 1.54%. The fact we’ve already broken above psy’ 1.50% is reflective of increasing upward pressure. Rather than psy’ 2.00%, I see next major resistance around 2.25%, as seems probable this year. If correct, bullish implications for the US financials, esp’ BAC and WFC.
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Dear Subscriber (or guest)
We’re now one sixth through the year, one that many are hoping will be far better than the horror of 2020. The econ-data and earnings are coming in broadly improved, juiced by monstrous deficit spending, largely funded by the fed.
A central issue is inflation, and whilst Powell says he doesn’t expect inflation to push above 2% for perhaps three or more years, I’d not be surprised to see things turn ‘warm’ by May/June.
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Speaking of Print Central…
The latest weekly update showed a net change of +$32.7bn vs +115.2 prior week, taking the balance sheet to a new hist’ high of $7.590trn.
Yield curve controls are next on the menu from Print Central, and are increasingly probable as the US 10yr yield heads toward next major resistance of 2.25%.
Eventually… the next grand equity/financial collapse, will see the Fed resort to the last thing… equity purchases. Its not a case of if… but when. This year? Unlikely… but 2022 appears possible.
Whilst Yellen is the US T-Sec, who will be the one to start buying (or rather stealing) equities? Bullard and Kashkari remain prime candidates, but regardless of who is it… they’ll be buying stocks, or should that be ‘stonks’?
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The weekend
Yours truly has a busy weekend ahead, not least with >36000 end month settlements to highlight on Twitter.
I need to test fire up desktop’2 (which should work), but I’m probably some weeks away from trying to stream anything.
For the guests out there… if you want more of the same, then subscribe! I know I’m worth 75/80 cents per trading day.
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Sincerely, have a restful weekend, and goodnight from London
yours… Philip
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The weekend post will appear Sat’12pm EDT @ https://tradingsunset.blogspot.com, and will detail ten of the world equity markets.