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.
From the desk of Steve Strazza @Sstrazza and Ian Culley @Ianculley
Earlier in the week, we held our July Monthly Conference Call, which Premium Members can access and rewatch here.
In this post, we’ll do our best to summarize it by highlighting five of the most important charts and/or themes we covered, along with commentary on each.
In fact, much of the sideways chop in commodities is taking place at logical levels of resistance. And aside from the dramatic sell-off in lumber, we see more upside resolutions than violations of critical support levels.
We recently pointed out that base metals managed to hang tough in the face of a significant correction in copper. And this week, tin is breaking out to new all-time highs.
From the desk of Steven Strazza @Sstrazza and Ian Culley @Ianculley
Overhead supply is a theme we're seeing all over these days. And this isn't just true for the stock market, but it's also dominating the commodity landscape.
Crude Oil reached our objective of 76 and turned lower. Copper remains stuck below its former 2011 highs. And Gold has been an absolute mess since peaking last August.
Even the few commodities that have recently broken above resistance zones -- such as Gasoline and Heating Oil -- have yet to follow through and confirm their new highs in any meaningful way.
Remember, commodities have enjoyed some explosive moves over the past year. Now, many are at logical levels to pause and digest recent gains. This is healthy stuff. Normal market behavior.
With the current market environment giving us many mixed messages, what better time to dive in and see what's happening underneath the surface?
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Earlier this week we shared a couple of trading ideas in the Commodities space. While Cotton as a commodity continues to shine through, we're seeing some movement in the related stocks as well.
Today we're here to connect the dots and see the impact of the rise in commodity prices on the related stocks.
So let's dive in!
Cotton has been positive in the recent past and has been achieving its targets. What we're seeing right now is an almost 8-year base breakout in the commodity! You can see the clean move and breakout on the monthly chart below. With that said, the long-term trend of this commodity will remain positive so long as it trades above the level of 24,225.
Welcome to our latest RPP Report, where we publish return tables for a variety of different asset classes and categories along with commentary on each.
Looking at the past helps put the future into context. In this post, we review the absolute and relative trends at play and preview some of the things we’re watching to profit in the weeks and months ahead.
We consider this our weekly state of the union address as we break down and reiterate both our tactical and structural outlook on various asset classes and discuss the most important themes and developments currently playing out in markets all around the world.
We've been pretty obnoxious about our position that markets are a total mess these days. But it is what it is, and we can only play the hand we're dealt.
Honestly, very little is currently moving up in commodities. For quite some time now we've been updating our stance on the commodity cycle and what we think of it. But over the past few months, the market has been messy, to say the least. In this kind of a mess, I find myself questioning the move in the base metals and precious metals pretty often. And while we haven't gotten any confirmation on that front, the confusion persists.
So then, what are we talking about here today? Let's take a look inside!
We have been adamant about our view that we are in a rather messy environment. For this reason, we've been approaching markets with caution for months now.
Up until earlier this year when risk assets began consolidating in sideways patterns, it had been nothing but blue skies and new highs.
When the weather report is sunny, the water is calm, and the sky is clear, we know the weight of the evidence is with the bulls and we can focus our attention on finding the best opportunities in the strongest areas as ways to express our thesis.
But that's just not where we find ourselves today. The current forecast is cloudy with a chance of rain. And it's already been overcast for months!
And when the outlook is murky, as it is now, we want to take a step back and really weigh the evidence that's in front of us. We need to stay up on incoming data points and monitor how markets react with so many charts currently at key levels of interest.
