Losing Money The Old Fashioned Way
If precious metals can't participate in an environment where commodities have done so well, when will they?
We're seeing new lows across the board in Gold and Silver relative to the rest of the group.
And when you compare precious metals with stocks, the look isn't so great either:
This is a much different story than what we continue to see out of Energy. What's interesting is that while the price of Oil keeps pushing up against those decade highs, Commercial Hedgers keep buying both Crude Oil Futures and RBOB Gasoline Futures, both near 3-year extremes
The strength remains in Energy.
I'm confident that trend will change at some point, but to be clear, it still has not changed.
Meanwhile, the bond market not crashing last week seemed to have a stabilizing impact on stocks.
We talk about the 3% in yields quite a bit, so this is the Treasuries ETF down to those 2018 lows:
If bonds are going to not crash for a bit, this would be a logical area for the "not crashing" to take place.
I think that could continue to lift some of the pressure off stocks, particularly the high growth areas.
So the bond market is important here.
And finally here is the Euro, down to those former lows from 2015 and 2017. There's a lot of market memory near these levels:
The Euro represents almost 60% of the entire US Dollar Index.
And we know that the Dollar Index in particular has had a strong negative correlation with risk assets in recent years.
So if you intend on making money being long stocks, most of that success is likely to be dependent upon a weaker US Dollar, and therefore a higher Euro, as shown above.
Things could play out differently than I described in the Dollar, or in Bonds or in Precious Metals and Commodities.
The good thing is that we'll just let the data dictate our approach. Right now, these are the trends in place. These are the correlations we have to work with. These are the key levels.
We'll adjust accordingly if/when the data suggests it's the right thing to do.
These are just some of things we'll be discussing on Monday's Team Meeting. Have you registered yet?
It's FREE!
This Monday May 16th @ 5PM ET a bunch of us are getting together to prepare for our big mid-month conference call later this week.
You can register here to join us for FREE.
We encourage you to chime in so bring your comments and questions.
See you Monday!
- JC