Risk assets are in a strong cyclical (12-18 months) Bull Market with meaningful upside for Stocks, Commodities and Yields. The S&P 500 is increasingly likely to hit the high end of my 2430-2500 target led by Technology, Financials, Industrials, Energy, Materials and Discretionary.
This is a Bull Market in the traditional sense whereby Growth and Value work higher together, breadth expands and sectors trend rather than rotate randomly at one another’s expense. This is in stark contrast to the narrow, defensive, bond proxy led, Fed/Macro dominated trading range of the past several years. This is a global phenomenon broadly speaking with stocks in Europe, Japan and the major Emerging Markets all in strong technical positions reinforced by favorable currency trends vis a vis Euro and Yen weakness and Ruble and Real strength.
As such, I remain a strong buyer of the Dollar Index and view the recent retest of 100 as a compelling buying opportunity. US 10 Year Yields are highly likely to hit my 3.10 target, Bund Yields are breaking out, and the 2/10s continue to steepen, the sum of which will continue to support Banks both globally and locally. High Yield (HYG) is breaking out and Spreads continue to collapse. This is Bullish.
Crude Oil remains in a strong technical position and it is Bullish that its correlation with the DXY has diminished. MLP’s are breaking out. Gold is of no use to me. Copper, Base Metals and Miners conversely are uniquely useful and a key component of this reflationary narrative. In sum, this is a strong cross asset setup, and “waiting for a pullback” is not a strong play in a strong trending market breaking out with a Bullish brio from a multiyear macro malaise.