It was a mixed month for equities, SPX +10pts (0.25%) to 4179, with the Transports -312pts (2.2%) to 13709. WTIC cooled by -$8.69 (11.3%) to $68.09. Copper fell -25cents (6.5%) to $3.64. The USD strengthened by +284bps to DXY 104.25. The US 10yr yield gained +20bps to 3.64%.
SPX, monthly
The sixth month higher of eight. I’d note the May settlement was far above the key 10MA (3983), as the m/t trend is unquestionably bullish. Monthly momentum ticked upward, if still negative.
If anything… equity bears should look for a failure in momentum from just under the key zero threshold. To be decisive… a monthly settlement <3950.
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Trans, monthly
The ‘old leader’ – Transports, declined for a third consecutive month, decisively settling under the key 10MA for the first time since Dec’2022. Monthly momentum has started to tick back lower, having stalled from under the zero threshold.
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WTIC, monthly
Oil declined for the TENTH month of twelve. April’s black candle played out, as the m/t trend remains very bearish from the June 2022 $123s. Momentum ticked lower, and is on the very low side. Renewed dollar strength didn’t help. Support $60s, and then psy’ $50.
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Copper, monthly
The third monthly decline of four. Momentum ticked lower for a second consecutive month, having stalled just under the key zero threshold in March. Dr Copper is warning of ‘something’… as all the talk of the ‘China recovery’ amounted to very little.
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USD, monthly
The king of FIAT land saw a strong rebound in May, as the DXY 100s are holding as new core support. The May candle is bullish engulfing, with a spike on the lower side from around the 100 threshold.
Momentum ticked back upward, if still on the moderately negative side. Soft target for June is the 10Ma in the 105s. Any price action in the 106s would merit attention, and re-open the door to original grander target of the 121s.
Or (as I sometimes say), would you prefer to hold Euros, Yen, or worse still… the UK Pound! The dollar doomers (not least Peter Schiff) have nothing to tout unless <88s.
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US 10yr yield, monthly
The US 10yr settled net higher for May, but the gain was relatively minor. Whilst monthly momentum continued to ticked lower, the rate of decline is lessening, and its possible we’ll stall just above the key zero threshold.
Broader structure is a giant bull flag. Provisionally confirmed >4.10%, or negated <3.00%. Structure is suggestive of a basic upside target of psy’ 5.00%, with a grander 7.00%. I accept the latter is bold, but even Dimon of JPM commented in May, he was open to rates ‘as high as seven percent’.
Ongoing chatter is highly suggestive the Fed will do nothing at the June 14th meeting, but they will likely raise rates July 26th… if only by another 25bps.
The obvious problem is if core inflation remains stuck around 5-6%, although to those on the eastern side of the Atlantic.. that looks pretty good!
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Looking ahead
Thursday will see Weekly jobs, productivity/costs, construction, EIA Pet’
Earnings: DG, M, BILI, HRL, LE, DLTH, ZS, AVGO, LULU, CHPT, DELL, FIVE
Event: it will be the start of a new month, which does tend to see ‘new money’ from the institutions spent.
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A farewell to May
April and May were both pretty annoying, with price action mostly comprised of chop… if leaning upward.
Yours truly is more concerned that summer is about to begin, and I’ve not even begun to search for a new place to live.
Goodnight from London