We held our March Monthly Conference Call on 16th which our Premium Members can access and rewatch here.
In this post, we’ll share five of the most important charts along with JC’s commentary of them and a brief explanation for each.
1. “What keeps us in the don’t-be-overly-bearish-of-Gold camp is the outperformance that we’ve seen from Silver.”
Click on chart to enlarge view.
When we look at the precious metals space as a whole, Gold is the only one that is down. Silver and Platinum are outperforming. This is one reason why we’re not overly bearish on Gold because this relative outperformance tells us that there something more here than meets the eye.
2. “The big trend that we absolutely need to continue to discuss and continue to bring up would be copper breaking out of a 15-year base.”
Commodities and Equities move together. So copper moving to 15-year highs would be a big positive for the current Bull market. This is definitely a space that we’re tracking. Currently, the base metals have been tapering off from their highs, and if that continues then we would be looking at failed breakouts. But a continuation in the current trend could definitely lead to a long term bull market going forward.
3. “Looking at the currencies of the world, there really have been risk-on currencies that have worked “
As can be seen in the above chart, the worst performers since November 2020 have been the safe-haven currencies that are Yen and US Dollar. As can be seen, the currencies that are leading this asset class are the risky ones such as AUD/JPY, GBP/JPY, CAD/JPY. In an environment such as the current one, the aggressive currencies will outperform the defensive ones.
This alludes to same the same risk-on sentiment that we’ve been experiencing for some time now.
4. “On a relative basis, this is Financials relative to the rest of the market and we’re still near the 2009 lows. We’re nowhere near the former highs of pre-crisis.”
US Financials have only recently bounced from the lows of the financial crisis, an 11-year period! Going by this move, there is a long way to go for the Financials as the market progresses. When we look at the XLF price chart, we notice a 3-year base breakout in price but when we look at it in conjunction with this relative strength chart, we get a better perspective of the kind of move one could envisage going forward.
A good move here bodes well for the market as a whole, so this is definitely something to have on the radar.
5. “Consumer staples on a relative basis bottomed out on March the 1st, two weeks back. Was that it? Will the consumer staples start to outperform?”
Consumer Staples rallying is inversely proportionate to the equity market rally. So in a scenario where the consumer staples are performing well, the stock market will underperform. We’re looking at this ratio chart to see if that happens, although this is only one of the many indicators we track. So is this the bottom? It’s possible. But unless a rally plays out in the consumer staples, we’re just going to continue to track this space.
We hope this gave you some perspective on the topics we’re focused on in the current environment. There are clear trends across various asset classes that we want to continue taking advantage of.
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