Power of the Vaccine – February 6th, 2021

After a bleak week, the market roared higher. As the number of people vaccinated surpassed the number of people who contracted the disease, that is a bullish inflection. Every sector surged and commodities had a big week. The US Dollar was up slightly on the week, and there are some important resistance levels across the currencies. I covered those off on the video. Bitcoin wants to break out to new highs and sits just below resistance. The long bond yields are just short of 52-week highs after a big move up. The two year yields dropped, which is odd and we’ll keep watching for more information from the move down.

After almost every chart showed major cracks last week, this week was a full reversal of fortune. Sectors and industry groups roared. Liquid energy (Oil etc) blasted higher. Most of the commodities were running hard. Natural Gas, Oil, Uranium, Copper, Lithium and rare earths all made nice moves. The pop expected in silver/silver miners happened but quickly reversed as the reddit traders got beat up. I covered the precious metals on the video this week.

Crude oil made a new 52-week high. I continue to like the oil trade, and the associated oil companies will be rerated higher by the analyst community. As the revenue of higher oil prices starts to add up, these companies have lots of room to move higher in price. Natural Gas had a good week on the back of the cold weather enveloping North America and looks set up for another one. I also like the setup in the uranium complex as it looks strong. Cameco and the other names mining uranium, all had nice runs. It does not appear to be at the end of trade. The volume piling up is compelling.

Financials had a big week on the back of the move in yields. Technology moved up in line with the indexes, but there was a wide dispersion of performance. Google and Microsoft hit new highs, the others – NFLX, AAPL, AMZN, FB, TSLA – did not. The markets closed on new highs, so that is bullish. The last chart in the newsletter shows the market swinging higher, then lower the last five weeks. Will that trend continue?

Summary: I continue to like the commodity trades as that matches with the inflation the Fed is trying to create. America continues to do a great job rolling out the vaccines, whereas other nations are struggling. Canada is in the struggling category. The backdrop in the USA is bullish, as things are improving. It also sounds like more stimulus is coming.

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