Thursday -- Competing Narratives & The Bond Spook Scenario

S&P E-mini Futures:
Follow through higher but off its best levels.

News:
Sea Of Green amid global equities with the UK FTSE 100 sitting it out (along with credit). Yields are skyrocketing. How soon before they spook equities was my thought intraday yesterday and this morning too.

Competing narratives in play: inflation coming due to fiscal stimulus via Trump. Growth ahead. Massive short covering. Boom time for banks. Buying spree after a long period of uncertainty. Echoes of Reagan-Era Morning In America.

Seems like each scenario is in play at the same time and the dust needs to settle.

One thing supporting short covering: total volume is huge, but where's the up volume?

FX:
Mostly a Risk On tone thus far (ex-commodities; lack of safe haven bid) along with USD strength.

Treasuries:
Prices cratering and yields booming. Not sure the market -- or the Fed -- is ready for this.

Energy:
The big word making the round this morning is "relentless" and comes from the IEA regarding crude oil supply growth. If correct, expect that WTI crude may not have ended its relentless decline from its 2014 highs.

WTI crude and NG are down this morning in the face of Sea Of Green in global equities.

Metals:
Of all the metals, copper seems to be saying boom the loudest. The rest seem to be calling the bluff of inflation except for palladium which may be setting up for more of a run, but would need above 728.

S&P Outlook:
Two competing scenarios. One has been shown before. One is new.

This is the one from before (not updated). We may be in the first leg of "3" before a little choppy corrective action.

The other has a tight stop (2179.99) and might be called the Bond Spook scenario if the market suddenly decides that the Fed is behind the curve and needs to jack up rates quickly.

So if price declines sharply rather than a choppy sideways affair, get ready to rumble. Wave 4 may not be over. The good news would be that a ripping wave 5 rally would be laying in wait somewhere around 1800 or below.