1. Tomorrow Is the Real Market Test
There isn’t much market-moving data today aside from U.S. Existing Home Sales.
Recently, we’ve learned that sellers have been pulling listings from the market and becoming more hesitant. Today’s report should provide additional insight into the state of the U.S. housing market.
Tomorrow is the big day. The day kicks off with U.S. CPI, followed by the Bank of Canada rate decision.
Current expectations call for a year-over-year CPI increase of more than 4%. That puts a lot of cold water on any talk of rate cuts in the near term. However, it’s important to ask what happens two to three quarters down the road. We could be witnessing the early stages of demand destruction at the moment.
As for the Bank of Canada, a hold is widely expected. It’s difficult to see the Bank raising rates at this point, but the statement and press conference should provide more color on what’s potentially ahead.
2. The S&P 500 Is at a Critical Crossroads
Looking strictly at the S&P 500 chart…
Friday’s price action was significant.
The index needs to move above Friday’s high to bring some optimism back into the market.
For now, major resistance sits around 7,600. A break above that level could open the door to fresh all-time highs.
On the downside, yesterday’s move was fairly muted, and the market faded throughout the day. That suggests excitement has not returned yet. If Friday’s low breaks, it would not be surprising to see considerably more selling.
Also keep in mind that there is a large gap from early April that remains largely unfilled. That gap sits just below 6,750. Over the past few years, the S&P 500 has been remarkably effective at closing and filling gaps.
3. Massive Sell Orders Incoming…
It’s important to understand that several major money events are approaching.
SpaceX is expected to IPO this week, and we’ve also learned that OpenAI has filed for an offering. Anthropic could be next, and we know Meta plans to sell additional stock as well.
As crazy as it sounds, there is a finite amount of money moving around the market in the near-term at least. When massive capital-raising events occur, money often rotates from one place to another.
That can create significant moves in unexpected areas. So, be careful.
And remember: Pay attention to the company, not just the stock price. Oh—and don’t forget about the lock-up periods.
4. Silver Holds the Line While Gold Remains Under Pressure
Silver tested its 200-day moving average yesterday and managed to close above it. Now let’s see if it can hold.
Gold, meanwhile, remains below its 200-day moving average. Yesterday marked the second consecutive close below that key level.
There are several reasons why precious metals are facing pressure: geopolitical tensions have calmed somewhat, interest rates are moving higher, other areas of the market remain “hot”, U.S. dollar has remains strong, and demand from India and China appears subdued.
At Zulfiqar Research, we also track mint sales, and the numbers aren’t encouraging right now.
Keep one thing in mind: this cooling period is actually healthy. There was simply too much bubble-like behavior in precious metals. We called it out.
The lower these metals go, the more attractive they become. The long-term fundamental outlook remains solid and may actually improve at lower prices.
5. Oil, Bitcoin & an Overlooked AI Risk
Oil is now trading below $90 per barrel. Do we finally have a peace deal? For chart watchers, the big level remains $85 on WTI crude.
If that level breaks, charts suggest a move toward $72 could happen relatively quickly.
Meanwhile, bond yields remain elevated.
As for Bitcoin, is it setting up for another move lower, or is it simply retesting the $61,000 level one more time before moving higher? We’ll see.
One final thought… or call it food for thought: AI needs data centers. But there are growing protests and opposition against data center construction in several areas. Could those delays slow down the AI rollout? It’s a question worth asking.