1. S&P 500 Printing A New High
Markets are ripping this morning on hopes the US–Iran ceasefire holds and the Strait of Hormuz opens up. Trump posted on Truth Social about it. The S&P 500 is going to be printing a new high at the open likely.
This rally has been no joke. If you have been following, it’s one of the robust rallies we have seen in years after the S&P 500 dropped almost in correction territory. Just 11 trading days to recover all the losses.
What doe this mean? Essentially saying that dip buyers are roust and market thinks nothing is wrong. Nothing broke.
Don’t forget we are in the midst of the earnings season. Know what you own as your stock specific risk is high.
2. Not Much Data Today
It is one of those days with not much data, but big headlines.
This big headline today is Strait of Hormuz opening up.
But, keep the big picture in mind: inflation remains sticky in the U.S., average consumer situation isn’t that great, and issues around private credit remain. However, not much noise about it from big banks earnings.
For Canada: government has majority, cost of living is a big issue, housing is suffering, economic growth is anemic at best, and consumer and business sentiment is still pessimistic.
3. Oil Drops, Energy Stocks Suffer
Oil is really reacting to the ceasefire and strait of Hormuz opening up news.
At the time of writing, WTI crude is at $82, and looks like a lot of sellers are around. That’s roughly 10% move down.
Remember: $82 is a big level for Oil. In fact, it was break above $82 that brought a lot of buyers into the market. Obviously, there were headlines too, but after $82, it really shot up. Let’s see how oil does around it. A lot of war premium is leaving.
And, as energy stocks were loved by investors as oil shot up, there’s selling there for now. XOM for example is down roughly 5% at the time of writing, and it is a quality name. More pain for speculative names. (We warned about this)
4. Gold, Silver & More
Gold is testing its 50-day moving average. Its around $4,897 and price at the time of writing is few dollars away from it. A close above this moving average can bring buyers. But, keep the big picture in mind. We did a chart view for gold, you can read here.
Silver: it is above its 50-day moving average. Just like gold, watch for a close above this moving average.
Copper: the reaction here isn’t as robust here. So, that’s something. But copper is saying industrial demand isn’t really hurt. Or, the demand for it remains robust.
Uranium stocks have caught a bid recently. Could they go back to highs seen in January again?
5. Dollar, Bitcoin, & Rates
Since war premium is leaving, dollar is sliding lower. Had you been following, the dollar index (DXY) never really broke above 100. Now, let’s see how it does around 96.5. If that breaks, DXY could drop lower.
Bitcoin is breaking above a big range. There could be upside here – $88k-$90k is the next resistance level.
Big move down in yields. Let’s see if the noise about cuts come back. But, we think there will be a lot of “wait and see,” approach for the next few weeks at the least. Also, as Zulfiqar Research has been asking: what’s on the backend of this oil shock we got. It may be temporary inflation followed by serious disinflation and borderline deflation.
Don’t also forget: everything is moving on headlines. What if the ceasefire doesn’t hold?