It was a bullish month for US equities, SPX +208pts (5.2%) to 4181, with the Transports +715pts (4.9%) to 15347. WTIC settled +$4.42 (7.5%) to $63.58. Copper soared +47 cents (11.8%) to $4.47. The USD weakened by -197bps to DXY 91.27. The US 10yr cooled by -9bps to 1.65%.
SPX, monthly
Trans, monthly
WTIC, monthly
Copper, monthly
USD, monthly
US 10yr yield, monthly
Summary
Equities: An unquestionably bullish month, with the SPX, Transports, Dow, Nasdaq comp’, and NYSE comp’ breaking new historic highs. The R2K is lagging, but there is little reason why that can’t be expected to follow in May.
Commodities: A very strong month for oil and copper, helped somewhat by the net weaker dollar, but also by the positive main market. Oil appears set for next resistance of $75/76s, whilst Copper appears set to break above the 2011 hist’ high of $4.65. From there, it’d be a fast run to psy’ $5.00. Frankly, the $7s appear viable. If the latter occurred, the bullish implications would be monstrous for FCX – which I hold, and should probably add to.
USD: April saw some distinct cooling to 90.39, and settling in the low 91s. Multi-month price structure is a bear flag, broadly holding under the 10MA. An eventual loss of the critical 88s would offer a spiral to next support of 80/78. If seen, it’d create powerful upward pressure on almost every asset class, not least commodities.
Bond yields: The first net monthly decline since Nov’2020. Its arguably just s/t consolidation. Big target is 2.25%, rather than a more natural psy’ 2.00%. Gundlach is notably also seeking a move to 2.25%. Some – such as Kevin O’Leary, are expecting near/at 3.00% by year end. In theory… its possible, if unlikely, as I’d imagine yield curve controls would keep things somewhat restrained into 2022.
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Dear Subscriber
Well… that concludes April. The equity (and to a lesser extent) commodity trains remain firmly on the tracks.
There is background crash calling out there, with some (understandably) touting the ‘sell in May’ notion. Its valid, but for now, having literally just printed a new hist’ high of sp’4218 on Thursday, there is ZERO reason to be overly bearish.
Yes, a powerful correction is increasingly due, but it seems we’ll more likely not see that until late summer/autumn.
The most valid excuse will be the fed backtracking on their ‘easy money into end 2023’, and either cutting back on QE, or even a rate hike. For the latter, I’d have to see CPI at least >3.5%. However, recent Powell talk seems to suggest he’d be comfortable to see ‘transitory’ CPI even above 5.0%, without raising rates.
In any case… it does seem that the excuse for the next major drop will be once the fed reacts to much higher CPI, and that is likely some months away.
Two indirect indicators might be WTIC $75/76s, along with the US 10yr yield to 2.25%, where yield curve controls would very likely be implemented, which the Gundlach has also been widely touting.
Yours truly is content to hold an array of stocks, mostly energy and commodity related. I’m still in no mood for options (after being poisoned via CCJ). I do hold some Litecoin, and I’m still meaning to get around to posting something on my experience with using Coinbase.
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Yours truly has moderate hopes that I’ll get some things done this weekend, not least with desktop’2. I’ve come around to the realisation I will need to upgrade my internet. An upload rate of 0.5mb just ain’t going to be enough for web streaming shows. So… I’ll need to sign up to 4G ‘mobile broadband’, and see how that works out. I’m actually hopeful 5G will be available by late summer.
There is so much more I want to do for you all… but I’m forever tired. I will… endeavour this May.
As ever, feel free to message me via Disqus or email.
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.
**I will try to cover some of the end month individual stock settlements on Twitter on Sat’, and earnings on Sunday.