From the desk of Steven Strazza @Sstrazza and Ian Culley @Ianculley
One of the most important risk ratios and easily the biggest snooze fest from the past year is finally starting to move.
That’s right – after going nowhere for more than a year, the Copper/Gold ratio is making a directional move! And believe it or not, it’s resolving in the opposite direction of interest rates.
Instead of following rates higher, Copper/Gold is rolling over to the downside and raising questions regarding risk appetite and overall market health.
We can’t emphasize the importance of these developments enough. We’ve been awaiting resolutions of these ranges since early last year, and it’s finally happening.
Let’s talk about it.
Here’s an overlay chart of the Copper/Gold ratio and Copper futures:
Our Hall of Famers list is composed of the 150 largest US-based stocks.
These stocks range from the mega-cap growth behemoths like Apple and Microsoft – with market caps in excess of $2T – to some of the new-age large-cap disruptors such as Moderna, Square, and Snap.
It has all the big names and more.
It doesn’t include ADRs or any stock not domiciled in the US. But don’t worry; we developed a separate universe for that which you can check out here.
The Hall of Famers is simple.
We take our list of 150 names and then apply our technical filters so the strongest stocks with the most momentum rise to the top.
Let’s dive right in and check out what these big boys are up to.
Not sure where I first heard it, but I’ve always loved this saying: “Bull markets take you to levels you never thought you would see. Bear markets take you to levels you never thought you would see again.” Since the S&P 500 is now down more than 20% from its January peak, we are able to discuss bear market tendencies without getting the “yeah buts” from polite society. The S&P 500 is at levels not seen since late-2020, while the small-cap Russell 2000 is below its pre-COVID high back to where it was in early-2018. The Value Line Geometric index is also below its pre-COVID high and is at a level it first reached in early 2015. That is seven years of no progress for an index that serves as a proxy for the median stock.
And don’t worry: Plenty of banter surrounding the yield curve will take center stage during all this recession talk.
Somehow, an inverted yield curve has become synonymous with recession even though the historical record supporting this narrative leaves room for plenty of interpretation.
The purpose of this post is not to present an argument on whether we’re already in a recession or if one is imminent. We’ll leave that up to the talking heads and economists.
Instead, we'll simply share where the yield curve is today and assess the likelihood of potential inversion.
Let’s take a look…
Here’s a triple-pane chart of the US 30-year, 10-year, and 5-year yields:
Taking losses is never fun. But it's the most important thing we do.
I wish it were different. I wish smart risk management was an exciting endeavor that made us happy. The kind of thing that makes us want to high-five our friends and adoring fans.
Unfortunately, it's more like that menial task that you have to do over and over again, hating every minute of it, but knowing it just has to be done (like the doing the dishes or laundry).
William Griffith, director of Procore Technologies $PCOR, reported an additional purchase of roughly $7 million, as he continues to build his position in the stock.
Under Iconiq Strategic Partners II, he now owns about 44 million shares for a total ownership interest of 33%.
Time and again, we've been referring to how Nifty50 has been displaying more resilience compared to its international counterparts. While the Indian markets have come under heavy pressure this week, global markets have been reeling under that pressure for longer.
So today, we're here to provide a perspective of where the global indices are, just to get an idea of the kind of market environment we're in.
