We retired our "Five Bull Market Barometers" in mid-July last year to make room for a new weekly post that's focused on the three most important charts for the week ahead.
This is that post, so let's jump into this week's edition.
We're back to discuss some commodity ideas that are looking good at current levels. For the longest time, we've been looking out for a commodity supercycle. Over the past few months, we saw base metals halting their move and digesting their gains. But there are certain pockets that are demanding our attention so we thought what better than to share them with you!
Nickel is trading at lifetime highs, ladies and gentlemen! That's big news coming at a time when we're seeing a mess in most asset classes and markets. With the close in the week gone by, the base metal moved past its resistance and closed above it.
As we can see below, the price was finding it difficult to get past the level of 1,425. Now with that out of the way, we're looking at a target of 1,630 in Nickel. 1,425 will continue to act as the risk management level. If we know anything about the recent move in base metals, then we know not to put all our eggs in one basket.
Several premature breakouts later we've reached this point. So it is all the more important to be clear about your risk management level!
From the desk of Steven Strazza @Sstrazza and Grant Hawkridge @granthawkridge
You’re probably sick of hearing this but it’s important! Even with the recent bout of volatility, new lows have been non-existent across most of the major averages in the US.
To be fair, many of our Intermarket relationships are still flashing red, suggesting continued headwinds for risk assets.
Earlier this week we saw significant selling pressure in equity markets both domestically and abroad. Conditions are as ripe as they’ve been in more than a year for the bears.
So, did we finally get that “fall day,” as our fellow Technician and friend Mike Hurley likes to call it?
The simple answer is no...
To us, the recent readings from our breadth indicators are no different from similar pullbacks over the past 18 months and not what a significant market top would look like.
But we always need to remember that like anything else, analyzing internals is a process.
With this in mind, let’s check in on the 21-day lows for all S&P market cap sizes:
The S&P 500 fell 1.5% on Monday and rebounded with a 1.5% gain on Tuesday. These were the 31st and 32nd daily moves of 1% or more so far in 2021. At this point last year, we had experienced 72 daily swings of 1% or more, the most we had seen by July in at least two decades. While 2021 has been a drop off from last year’s torrid pace, it’s nothing compared to what was seen in 2017 (which had just 4 moves of 1% in either direction at this point, and finished the year with just 8). What is amazing about 2021 is how closely it has matched the median experience of the past 20+ years. So far this has been a year that is remarkable in its unremarkableness.
So Steve Strazza hit me up yesterday with: "Have you seen our latest 2-to-100 Club report? All of those stocks are breaking out!"
When Strazza gets giddy about price action, I take notice. Of course, I had to pull it up and scan the list. And sure enough, every one of those names is moving in the right direction. Some already moved so quickly that I'm going to hold off for a better possible entry point. But one of those names just triggered yesterday and is giving us a well-timed pullback today for us to get positioned.
The Outperformers is our newest scan that pinpoints the very best stocks in the market. It’s the fastest, easiest way to find quality names that are primed for major moves.
The goal is that as the market rally progresses, the sector rotation within the market will reflect in this scan. So while our Top/Down Analysis helps us with the broader view of the market, this Bottom/Up scan makes sure that we catch the slightest change in sentiment.
From the desk of Steve Strazza @Sstrazza and Ian Culley @Ianculley
A revolution in energy is upon us.
Some like to call it the green revolution or the transition to renewable and alternative energy. How you want to label it isn’t what matters.
All we care about is that the landscape for energy and how we use it is changing dramatically.
As the world quickly changes and the demand for energy expands, how we generate and utilize it, as well as the natural resources we rely upon to do so - will inevitably change, and adapt to this new environment.
Of course, we’ll continue to burn coal, crude oil, and natural gas for the foreseeable future. But there are other pockets of strength arising in areas that could very well be secular growth trends for decades into the future.
We’re always looking to identify these new arenas of growth. Here’s the way we see it...
With strong prospects for global growth and economic expansion in the cards, additional energy sources will need to be created so that supply can meet the growing demand being placed on an already antiquated and stressed infrastructure.
I've personally been in the market for a new or used car for a few months now, and let's just say it hasn't been easy. The entire supply chain has been disrupted, and the market has been unable to keep up with demand.
I finally made the decision to stop my search until the supply crunch for semiconductors and other critical inputs alleviates. I could be waiting a while though, as this has already been going on for about a year. Thankfully, I live on an island that is only 8 square miles, so my bike or feet can take me wherever I need to go in the meantime.
Hello, this is the nurse from camp. Your son had an accident. He's fine but I need to talk to you…
I quickly called back to get the details. I was on the road just a few minutes later, making a nighttime trip to a rural emergency room 100 miles away. As it turns out, my son suffered a broken arm during a relatively run-of-the-mill game of chase that involved jumping across a small ditch and not quite sticking the landing. He was doing what we sent him to camp to do.
A couple of hours alone in the car gave me plenty of time to think about all types of risks and how they are unevenly distributed across both space and time. Accidents can really happen anywhere. Still, we have nurses at summer camps, not in our living rooms. Broken arms and other more minor injuries are more likely at the former than the later.
