Our indicator constructed from the trends in the CRB Index, gold, and yields on the 10 year Treasury is not extreme but it did rise last week suggesting that inflationary headwinds are increasing for equities. Another push higher in gold or possibly in Treasury yields would send this indicator into extreme territory.

We last looked at this indicator three weeks ago. At that time, the indicator had come off its extreme levels, and with prices on the SP500 above their 40 week moving average and oversold on a short term basis, this represented a good entry point. So far, so good as long as inflationary headwinds remain tame. In this environment, this remains a big "if". The indicator is shown below.

Figure 1. SP500/ weekly