S&P 500 rising while gold and bond yields fall

The S&P 500 is set to break resistance at 1600, which would suggest an advance to 1700, but expect a correction to test the new support level before the quarter ends. Troughs above zero on 13-week Twiggs Momentum indicate a healthy primary up-trend.

S&P 500 Index

* Target calculation: 1350 + ( 1350 – 1100 ) = 1600

The red and green arrows above indicate previous turning points at March and September quarter ends. A correction that respects support at 1500 in the current quarter would confirm the breakout.

Falling 10-year Treasury yields suggest that inflation expectations are falling. Breach of 1.70% would indicate another test of primary support at 1.40%, but rising Twiggs Momentum indicates that a bottom is forming.
10-Year Treasury Yields
Reversal of gold below $1500/ounce confirms that demand for gold as a safe-haven and inflation-hedge is fading — a bullish sign for stocks.

Bellwether transport stock Fedex dipped below $100 after an earnings disappointment but remains in a primary up-trend. Recovery above $100 would suggest that the economic recovery is on track, while breach of the rising trendline (and support at $85) would warn of a down-turn.

Structural flaws in the US economy remain, but the market is gaining momentum and the current advance shows no signs of ending.