Market Commentary

The S&P 500 made a higher close this week. The Dow was the best performer with the Nasdaq underperforming again. Markets still look pretty bullish. Once again, the breadth on the normal indicators continues to signal ok. The SSI indicators are still a little weak as the faster indicators are at 50% or less. The Nasdaq probably needs to join the party to turn these up.

It’s all about the commodities right now. Launch parties going off every day. Stuff like CNQ, a big oil producer breaking out to all-time highs while oil is still 60% off the highs of 2008. Oily names like DVN making new 52-week highs, XOM, COP, CVX all popping out of bull flags. Canadian names like ATH.TO at three-year highs. I own some of the oil companies mentioned. Mining charts are popping like popcorn at a movie theatre. Gold miners are the same. Uranium names are flying this week. Financials also had a strong week. JPM closing at new all-time highs on a breakout. Transports and industrials also surged. Tech and semiconductors are still weak.

The vicious swing in commodities all rotated higher on the back of the US dollar breaking below the 2021 uptrend. A big outside bar pointing lower hit the dollar chart and sent commodities flying higher.

I remain concerned about the Nasdaq weakness, but at this point it just seems a strong rotation rather than outright selling. However, it seems that investors staying on the tech side continue to have to wait for the tech names to start to turn up .

Summary: A vast number of raw commodity charts are already running up near all-time highs. Copper exploded to new all-time highs. The commodity currencies like Canada and CEW ETF, freight indexes and other commodities are confirming Copper’s run. The steel ETF at 10-year highs, etc. But the oils are just bouncing off of losses of 90% from the 2014 highs. It looks like massive upside available there if they break the 7-year downtrend.

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• By ClearWater Private Wealth
• May 10, 2021

The S&P 500 made higher closes again this week but closed unchanged Friday to Friday. All of the indexes are poised to break out higher, and the basic breadth charts suggest that is probably what comes next. My strength indexes are at odds with those basic A/D lines and are meaningfully declining. The Nasdaq A/D looks weaker, but nothing is broken on those traditional metrics.

Globally, the markets were down a little more than 1%, but it is the second week of that drift lower. Commodity countries like Russia and Brazil were lower by about 2%, whereas Canada and Australia were flat on the week.

Commodities had an up week, as industrial metals were up nicely. I was highlighting this last week. However, there is a good saying that matches what happened this week. “Expect the expected”. The problem is I expected the miners to move in sympathy with the metals but instead they reversed lower rather than breaking out. When the expected doesn’t happen, that is worth noting. For me, the strong bounce in the dollar, more global weakness, a failure on the Shanghai to follow through, Sweden making four-week lows, the US markets unable to rally on significant, remarkable large cap tech earnings, the EV trades from last week all failing, miners rolling over, were all adding a smoky, stormy haze to the clarity I had last week. Some of the EV trades rallied Friday but none closed above the levels pointed out last week. Commodities have typically rallied in the weekend with a declining dollar, but Friday’s dollar jump changed all that.

Summary: I closed my industrial metal trades now that the copper miners to copper ratio uptrend has been broken. I hold a large number of oil trades. They are still profitable, but I’ll have to check my oil ego at the door if the overall market starts to pull back and these stocks start to dump. With big tech not able to rally the indexes, what will carry us higher?

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• By ClearWater Private Wealth
• May 3, 2021

The S&P 500 closed near a new high again. The market pushed down Monday, Tuesday and Thursday but could not build any downside momentum. The resilience is impressive. The Nasdaq is building out a consolidation zone after the run up off the March lows. All of the indexes are poised to break out higher, and the breadth suggests that is probably what comes next.

Globally, the markets were down around 1%, which is not exactly plummeting. It looks more like a consolidation within an uptrend and the SSIH suggests that in the US markets as well. Commodities had an up week, as industrial metals commodity related trades were up nicely. The charts related to electric vehicles were setting up and some of the strongest charts in the list were the industrial metal miners. Corn, Soybean and Wheat had big moves higher too.

This week saw more stocks up big than down big, which is interesting with the indexes finishing slightly lower. I am expecting a turn towards the materials, industrials, energy and technology sectors.

While bitcoin finished the week around $50,000, it traded as low as $47,500. Once again, the wide range in Bitcoin is a lot more difficult to buy and hold with a 27% pullback off the highs in a little more than a week.

Summary: A major trend line is breaking in commodities. I want to be part of that trade as it breaks out. The clean tech space is a massive user of commodities, so my favorite way to play a lot of these ideas is through the commodity related stocks. In particular, look to the industrial metal miners. I don’t want to be a turkey waiting as the commodities move higher, so I am setting up in the clean tech related trades expecting to climb higher.

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• By ClearWater Private Wealth
• April 26, 2021