Key Takeaway

The S&P 500 is testing uptrend support after a pullback last week. Our metrics indicate moderate risk-on positioning ahead of a seasonally weak period for equity markets. We have a mix of defensive positioning, particularly in healthcare, utilities, and consumer staples, along with some cyclical exposure to financial stocks.

The copper/gold ratio is at resistance after reaching overbought levels earlier this year. This ratio typically coincides with movements in the 10-year Treasury yield, although its correlation with the S&P 500 is not as strong. We view the resistance in copper/gold as a reflection of weakness in the commodities, which preceded a decline in the bond yields over the past few months. 

Pullbacks in copper/gold could find support later this year, and we will monitor for a potential breakout to confirm additional risk positioning. 

Long-term Copper/Gold Ratio