Updates for Monday 5/24/21

Entry/exit signals for SPY QQQ TQQQ IWM SPX NDX based on VIX.
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​Updates 8:28 PM EST- Sunday (for Monday 5/24/21)

Perspective
According to WSJ: 
Several Federal Reserve officials said Friday that the day is approaching when the central bank will dial back the stimulus it is providing the U.S. economy, but they didn’t say when.

The Fed is clearly warming up the investor mindsets to transition to a tighter monetary policy.   It won't be "if".  It will be "when".   This key decision will continue to loom over the economy, and will be watched closely at the upcoming FOMC announcement on 6/16.   

​More Fed speakers are scheduled for this coming week.   Some closely watched economics reports will be:

Tue:  Case-Shiller Home Price Index, New Home Sales
Thu:  Durable Goods Orders,  GDP, Jobless Claims 
Fri:    Personal Income & Outlays

Friday's report is quite important as it is the Fed's preferred inflation gauge.    Friday may be a volatile day for all assets as all markets are closed on Monday 5/31 for Memorial Day.

While the Fed waits for their official data, most consumers will say it feels like rampant inflation is already here, in the price of houses, cars, food, and basic commodities.   Don't forget the staggering costs of higher education and healthcare.    

However, we've been observing that the following traditional inflation havens appear to have formed tops and have been dropping in the last couple weeks:

• TIP bonds (TIP)
• REITs (IYR)
• Commodities (COM)

Real gold (GLD) is still standing, while digital gold (BTC, ETH, DOGE) is heading to the abyss instead of the moon.   

The most interesting charts though are those of Treasury bonds (TLT, IEF).  They have been anchoring at support for the last several weeks, and appear to be ready to rise.   This means important yields like US 10-year are likely to drop.

To us, this means that investors are not as concerned about long-term inflation as the headlines would have us believed.   In the short term, it may mean that the rotation into commodities and value stocks that started in late 2020 are fading.   

Instead we may start to see the rotation back into technology.  Confirmations of this thesis are on the charts of TSLA and ARKK, the bellwether of tech risk takers.   They both formed nice bullish hammers at key support levels on their weekly charts.

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