Brent crude broke resistance at $84, signaling a fresh advance. Expect retracement to test the new support level but respect is likely and would confirm our target of $94 per barrel.
Nymex light crude similarly broke resistance at $80, offering a target of $90 per barrel.
The threaten upsurge in inflation spooked bond investors, with the 10-year Treasury yield breaking resistance at 4.20%.
We expect a test of resistance at our target of 4.35%.
The Dollar Index jumped above resistance at 103 in response.
Gold retreated to test support at $2150 per ounce. Narrow consolidation is a bullish sign and follow-through above $2200 would confirm our target of $2400 per ounce. Breach of $2150 is less likely but would indicate a test of $2075.
The S&P 500 eased in response to higher long-term bond yields. Lower Trend Index peaks warn of a correction. Breach of support at 5100 would confirm.
The Russell 2000 small caps ETF (IWM) reacted with greater alarm, testing support at 200. Lower Trend Index peaks again warn of a correction and breach of support at 200 would confirm, offering a short-term target of 190.
Conclusion
An upward spike in crude oil threatens higher inflation which in turn would be likely to delay rate cuts by the Fed, causing long-term interest rates to rise.
We are short-term bullish on Crude and Gold; bearish on Stocks and long-duration Bonds.
