Epic Breakouts In These Stocks

JC Parets
January 9, 2022

Do you think the world is coming to an end if Financials are breaking out to new all-time highs?

The answer is no.

If America's most important sector is leading the way higher, then that probably speaks to more continued rotation, not massive distribution.

Sure, some sectors are getting hit.

Some sectors got hit last year too. Most of them did at some point actually.

But if you recall, when some stocks were struggling, there was always another group coming in to pick up the slack.

In this case, it's arguably the world's most important sector:

That's probably not a bad thing.

One name that stands out from the group is Silicon Valley Bank $SIVB. If we're above 667 we want to be long with a target of 1000:

The world's probably not falling apart if banks stocks are ripping.

Meanwhile, take a look at that weekly candle in Energy.

Did you see this thing?

I can't imagine that energy stocks would be breaking out with banks if there were real systemic issues in risk assets.

These things happening points to the exact opposite of that.

And to add to all of it, when you look at the world's most defensive assets, none of them are going up!

Look at Treasury Bonds breaking down and making new lows. Look at Japanese Yen breaking to new lows. And look at gold, not participating at all with higher commodities:

It's funny, literally every commodity on earth has been going higher, factoring in this inflationary data that keeps flooding our inbox.

But not gold.

Gold is on strike and refuses to earn any money for its religious cult followers.

We know Gold and Silver have been making new lows relative to the S&P500 for a while now. It's been quite the embarrassment for those folks.

But now even when compared to commodities, they still can't get out of their own way. All the commodities are doing well.....except for precious metals:

When will the pain stop?

I don't know.

For me, it's less about the feelings and tears of the gold bugs, and more about how defensive assets are behaving in general.

As you can see in that chart above, Japanese Yen and Treasury bonds have completely fallen apart. And Gold isn't acting much better.

In the past, you've seen a bid out of most of these defensive names before/while trouble hits the stock market.

But we're just not seeing that today.

Again, that speaks to this being more rotation (like we saw all of last year) and less about an epic topping pattern.

Things can change. And we'll be monitoring all assets, but specifically these as evidence of defensive rotation.

We just haven't seen it.

JC

 

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