Large Caps Lunge Higher – July 05, 2021

The markets surged forward all week. The Quad witching date (more info below) marked the low, and we have been racing higher from there. After the SPX made a new 4-week low, scaring most investors, it’s been a run for the roses higher. While breadth is still thin, it is improving. I expect that to continue into what should be a robust reopening against weak comps from a year ago. However, in a linked article, it would appear, it’s not just strength against good comps. It’s very strong data from the few who have reported so far, period. That’s as fundamental as I get investing, as the charts have been shouting that for weeks.

The dollar is at a key inflection point. It would appear to me to be trying to roll over lower. If that happens, I expect a big resurgence into the commodity related trades. While oil has been on the front burner, the oil producers have lagged. FCX pulled back 25% from the highs in May. That’s a lot! I also showed another big picture trade setting up in Gold. There is a complete section of this report discussing the technicals. I could probably find another 10 charts to say why it looks bullish to me, but the bottom line is I want to be very ready with buy orders ready on the best gold names if this is going to happen!

OPEC has us frozen in time for the weekend, but it would appear to me to be very bullish. They are suggesting an increase of 400,000 barrels per day, for each month until December. That wouldn’t handle the shortfall in America, let alone the global inventory declines. I interpret it as bullish. Pardon me if my bias is showing! Even the Whitehouse noticed higher oil prices this week due to squeezing producers to not produce. To my knowledge the Canadian PM hasn’t noticed the rising price.

The dollar seems to be a light switch here, with lots of trades pivoting around it currently. A declining dollar seems to help the $SPX stock market rally easily, whereas a rising dollar gives us a slower, more laboring rise. While not evident each and every day, some charts below highlight what I see going on. You can decide if you agree.

Summary: The indexes are breaking out to new highs, let’s pick our spots. Technology, communications, healthcare, discretionary, industrials, financials, energy all look good. What’s not to like?

To continue reading click the link below…