SOX
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SOX
PLTR
MSFT
NKD1! was hit by the exact combination that matters most for Japan: oil above 100, higher domestic and global yields, and a stronger yen. The 10-year JGB yield briefly reached 3%, BOJ rate-hike expectations continued to rise, and exporters and AI-related names came under pressure.
Even so, the 63.8K level I have been highlighting was tested and reclaimed. It now converges with the ascending trendline. As long as both hold, the rebound remains alive, with 69K back in play. A break and hold below both opens further downside.
Z1! lost the ascending trendline as the energy shock fed directly into the UK bond market. Oil above 100 pushed inflation and BOE rate-hike expectations higher, while the 10-year gilt yield reached a 19-year high. FTSE's heavy energy exposure cushioned the move, but it was not enough to offset the broader pressure from higher yields.
RUT DJI
Small caps and industrials have already been hit hard by the inflation prints, with clear relative weakness across RUT and DJI.
SPX and ES1! are trading inside a compressing wedge. Both SPX and NDX are showing resilience against hotter inflation and soaring crude prices, as the Mag 7 and semiconductors continue to carry the indices.
The market is front-running another Trump TACO. If he does not deliver one, I expect a Volmageddon-style event across SPX and NDX.
Our ascending trendline support on NQ1! continues to hold despite the increasingly hostile macro backdrop.
Small caps and industrials have already been hit hard by the inflation prints, with clear relative weakness across RUT and DJI.
HTI1!
DX1!
XLF
RUT bounced from our support as expected.
MAGS
VIX
US02Y As we have seen in recent weeks, equities and commodities have moved inversely to yields. I expect these correlations to strengthen as yields climb higher. The only lasting solution to this energy-driven pressure on yields remains a peace deal that restores normal shipping through the Strait of Hormuz. So far, I see no meaningful progress toward one.
SOXX SOX
I first shared this comparison of SOX with its dot-com-era price action in Tactical Positioning | Week of 06.29. Since then, SOX has closely followed that path. If it continues to do so, we would very likely see a retest of SOXX=533 or even SOXX+560 in the coming weeks, which should take SPX and NDX back to their ATHs.
XAGUSDTechnical: 63.1 remains support after the rejection at 70. Holding 63.1 keeps another test of 70 in play. A sustained break above 70 opens further upside; a break below 63.1 puts the ascending trendline back in play.
HTI1!
DBA
A tariff increase could produce a one-off rise in the price level as the higher cost is passed through. Once absorbed, it stops adding to inflation.
A prolonged energy supply shock can keep delivering fresh cost pressure before the previous increases have even been absorbed. Crude reprices immediately, but the full impact takes months to work through the economy. Diesel, freight and processing costs rise. Higher natural gas prices feed into fertilizer. Inventories, contracts and crop cycles stagger the transmission into agriculture and food prices. The shock keeps working its way downstream long after the initial jump in crude.
The longer those cost increases keep arriving, the greater the risk that they feed into inflation expectations, wage demands and repeated price increases. That is how a supply shock can turn into persistent inflation. Once those expectations become embedded in wage and price setting, bringing inflation down becomes harder.
This is why I have said Warsh cannot keep rates unchanged indefinitely. The past two weeks have brought that constraint back into focus. His Jackson Hole speech put inflation at the center of the Fed's agenda. Friday's strong payrolls then pushed Treasury yields higher and strengthened expectations for another hike.
28.4 remains breakout support. While it holds, further upside remains in play. A sustained move back below 28.4 invalidates the breakout and returns DBA to its prior range.
KOSPI remains an important asset to monitor, especially after spending the past few weeks trapped in a narrow range. AI continues to advance at a stunning pace. Should the index resolve higher, we will very likely see new ATHs in SPX and NDX soon. A downside break, however, would usher in a new wave lower to retest the previous low.
PLTR
XOP
DXY As I mentioned before, the dollar is unlikely to weaken against a backdrop of higher yields.
US30Y US10Y printed a new YTD high this week. US2Y, US10Y, and US30Y have been taking turns printing new highs week after week. US Treasury yields remain the single most important asset to monitor.
HG1! Exchange inventories outside the U.S. continued to fall, with SHFE stocks down 13% this week.
Copper continues to trade around the upper boundary of its multi-year ascending channel. The wedge is tightening. I expect an explosive move in either direction soon.
Both outcomes could hit the broader market hard. A vertical move higher would add another wave of inflation pressure. A violent break lower would likely be part of a liquidation across assets, triggered by higher rates or a steep equity drawdown.
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