Appraising The Rally – June 05, 2021

The markets pushed higher on Friday. The most important thing to note was that the technology space did pretty well. I continue to like some of the set ups in clean energy as I mentioned last week. It looks like the market might finally get enough momentum to break through prior highs and get rolling here. The real problem is that the momentum has been slow to lift off which is very concerning. Speculative stuff like ARKK and bitcoin haven’t really been able to break out.

The oil rally this week was big, real big. Oil moved through $67 with almost no real retracement and by the end of the week we were sitting at $69.60 looking to go higher. Hopefully all the oil commentary has had you in the space. Gasoline volumes barely dropped off after the long weekend, suggesting a lot more demand coming. Oil company after oil company, as well as country oil ministers are all warning of a lack of oil in 2022. No one in government wants to hear it, as the governments and individuals all want to go green. The real problem is the public is not ready for big ambitious mining plans to fulfill electrical requirements. Governments have identified oil as the evil villain, providing heat, cooling, mobility, clothing, packaging, security, and manufacturing. For something so needed, oil is the villain in abundance and the villain for the shortfall in Carolina with the Colonial pipeline security issues. We sit with a shortage of electrical energy, while we push electric cars to people. Some Texans are still without power. We are going to be short of liquid energy, due to the lack of drilling. As oil closed a week ago, the number of drilling rigs dropped (by 1 rig) from the week before. Hardly a surge to be worried about. Drilling takes time to pick up, but certainly multi-year highs would have been motivating. Not yet!

Uranium, lithium, and rare earth metals all had strong weeks. It looks like Uranium is finally trending after I had given up hope with all the chopping. Copper and Gold closed down on the week.

The bond yield chart is really important this week. If all the yields start to move lower, that will put pressure on financials, and may reignite the tech trade.