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Weekly Memorandum 12/13/2021

The S&P closed at a record high on Friday, but not at a new intraday high. Unless the Dow and Nasdaq can follow suit, it could turn into a much stronger sell signal. There are mounting signs that the rally is starting to crack, mainly due to the fact that fewer and fewer stocks are participating in this rally. This typically precedes a decline.

Bonds gave back some of their recent gains last week, but managed to close well off the week's low. They are bidding thus far this morning as the flight-to-safety trade seems to be working again. The inflationary consensus seems a bit too large right now, and could be due for a period of 'transitory deflation' to quell what's turned into a very crowded trade. This could create a favorable environment for precious metals in time. Both Gold and Silver are trying to solidify higher-lows with respect to their longer-term trend. The U.S. Dollar is consolidating near multi-month highs, which is bullish price action too. This could add further fuel to transitory deflationary pressures.

Cryptocurrencies remain rife with technical issues as they cannot sustain a bid and continue to print lower-lows and lower-highs. This is not an asset class one should be blindly holding with any attention to risk management right now.

We also encourage readers to check out our annual subscriptions to the Mercator Letter and Mercator Crypto report, which remain on sale at a discounted rate until the end of the year. Prices will be raised beginning in 2022, so don't miss out on your chance to lock-in a bargained rate!

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