Short-term trends in US Equities remain bullish but could face some consolidation starting this week, potentially, given a combination of slowing breadth following the steep run-up to overbought territory. Treasuries and the US Dollar look to be close to inflection points, which could drive both Yields and the US Dollar back to new monthly lows. Emerging markets should begin to strengthen as DXY rolls over, and I expect to see precious and base metals also start to gain in relative strength in the weeks ahead. At present, despite SPX having reached an area which looks important from a price perspective, time factors still look somewhat premature in signaling a potential top. For now, price has not given any technical indication of breaking its uptrend, and until this happens, it arguably remains right to stick with this trend. I anticipate that a push higher in Technology this week should begin to find resistance, and that breadth could show some signs of waning this week.
Key technical developments on Tuesday had less to do with any material change in US Equity prices, but rather in gains in both long-term bond yields and Commodities.
While some might be positioning for a rebound in the VIX after May’s expiration, it still looks to possibly fall over the next week, given a combination of ongoing weak price structure and momentum coupled with a lack of meaningful downside exhaustion signals. While I suspect that implied volatility likely would be attractive on a 4–6-week basis with VIX between 16-18, the technical setup for owning implied vol” at this time remains premature.
Specifically with regards to US equity index price action, the minor weakness on Tuesday wasn’t sufficient to violate Monday’s lows. Therefore, for those watching carefully for any instance of a change of trend, it still looks premature technically, and I suspect that QQQ might push higher up to test all-time highs before much of a stalling out.
As seen below, despite QQQ having closed on Tuesday less than two points above last Wednesday’s close, there hasn’t been any evidence of trend reversal. Moreover, for those investors studying DeMark signals carefully to see if these are close to completion, the confluence, which I typically look for given a possible combination of TD Combo, TD Sequential, and TD Sell Setup readings, likely won’t be complete for another five trading days. (While a TD Sell Setup could be complete on Wednesday close above $519.24, it also requires a push over this past Monday’s intra-day highs at $522.53 to establish the nine-count of this Sell Setup as the highest bar of the current reading.) Meanwhile, it will potentially take nearly 3-4 weeks before the weekly signals are in place. Thus, the earliest possibility for any larger stalling out (given the confluence of daily and weekly signals in tandem) won’t occur until potentially mid-June.
In plain English, it still looks a bit early to try to fade this rally, and momentum and trend structure remains bullish, with no evidence of a price reversal having occurred on Tuesday.
Nasdaq QQQ Invesco ETF – QQQ
Commodities might start to lift in the months to come
Interestingly enough, while many continue to harbor uncertainty regarding inflation, the equal-weighted Commodity sector by GSCI has actually fallen in price since early this year.
I specifically utilize this chart from Bloomberg to avoid the Energy dominated gauges which many typically use which have an outsized percentage in WTI Crude oil.
However, given the debate regarding the budget and possibility of continued high spending over the next decade along with uncertainty regarding tariffs, it’s important to see that many commodities have begun to spike higher in recent days.
Specifically, Platinum broke out above 2025’s resistance on Tuesday, while Silver also made a move to the highest levels in nearly two weeks. It’s thought that increased retail demand in China might be behind this surge but there was also a strong push higher in commodities like Natural Gas, as well as signs of a recovery in the Grains on Tuesday.
The EWCI, or the GWCI Equal-weighted Commodity sector index, looks to be trying to turn higher following its early-year decline. Price found key support in April near the larger trendline and now has begun to push higher. If/when May highs are exceeded, this could allow for a greater than expected surge in Commodities in the months ahead.
S&P GSCI Equal Weight Commodity Sector
Platinum has broken out of trends since last May
Platinum has begun to show evidence of exceeding the current downtrend that’s been in place since last May.
Bloomberg reported today that the number of Platinum retailers in the Shuibei market in Shenzhen tripled in just a month. While it’s difficult to know whether the extent in Gold’ rally in the last month is changing consumer jewelry preferences, today’s move looks important and bullish.
Furthermore, Silver prices also spiked in trading on Tuesday and finished at the highest levels since early May.
The Aberdeen Physical platinum shares ETF spiked up more than 5% on Tuesday and is in the process of breaking out of its own consolidation pattern since February 2021.
As shown below, front-month July Platinum futures rise nearly 5% today and have been up more than 8.5% in the last month. I expect a coming test and breakout of 2024 highs.
Platinum Future
Grains could be bottoming as both Wheat, and Corn make strong gains on Tuesday
Outside of the metals, it’s interesting that Grains also have begun to turn up sharply after months of weakness.
Daily charts of July Wheat Futures have exceeded trends since February, which is a technically bullish development following the last few months of decline.
Furthermore, Corn also showed evidence of reversing course, and pushed up over this Spring’s lows when eyeing the front-month Corn futures contract (not shown).
Overall, there look to be some important breakouts happening across the commodity landscape, which suggest that Commodities deserve a fresh look.
This might help some of the Agricultural stocks within the Materials sector start to show better strength after some lagging behavior in recent months. Stocks like DE, MOS have been particularly strong recently and remain attractive technically. However, others like BG and ADM, not to mention CAT, deserve a second look given what’s happening with the commodity space.
Materials also might begin to act better in the months ahead after underperforming vs. the S&P 500 for the last two years (not shown).
Overall, I suspect that Wheat could be on the verge of pushing higher above $6/bushel in the months ahead given this breakout today.
Wheat Future (CBT)
