Anti-markets (to a seasonal rally scenario) being the US dollar index (DXY) and Gold/Silver ratio, which signal lack of liquidity when rising together and sufficient market liquidity when dropping together.
USD broke down hard on yesterday’s CPI hype and this is a well deserved correction. But USD is actually ticking a minor short-term support level at 106.60. The ultimate downside target was/is the rising SMA 200 at around 105.
If we are already on a seasonal rally scenario and if USD is not going to break down from the SMA 200, then there is already a caution signal upcoming. If, however, USD finds support here and bounces it would actually be better for a seasonal market rally situation, duration wise. The other option is a breakdown in USD as inflation signals fade and the hawking Fed softens. It’s premature to expect that in my opinion. USD is intact above 105.
USD’s companion as an anti-market, the Gold/Silver ratio is bouncing but still in breakdown mode. It will bear watching closely moving forward.
As yet I don’t see reason to abandon a positive seasonal plan from the standpoint of these two ‘indicators’. But it could get bumpy in the interim, which could actually provide the fuel for a more extended seasonal phase. Things did get really peppy yesterday, after all.