Semiconductors Engage – June 12, 2021

The markets pushed higher by Friday. The most important thing to note was that the technology space did pretty well again. XLK and XLY both look better for the first time in a while. A few semiconductor names and some consumer discretionary names are starting to look good. EBAY as an example is breaking out. I like semi’s and software and am now adding consumer discretionary.

Energy continued higher. Five more drilling rigs started working as price moved through $70. The windsock and the slow speed limit in the photo suggest what is happening in the market. Just a little push each week in the prices. Natural Gas had a good week and it continues to look good. I own some of the Natural gas companies in Canada and they are starting to move higher.

The bond yield chart is really important again this week. Bond yields moved lower and the 5-year broke the trend line. The 30-year yield moved down quickly to touch a 10-month trend line.

The US dollar pushed higher and closed at a 5-week high. Bitcoin pushed up near $40000 over the weekend. Perhaps this is the sudden surge to the levels I laid out last week. The Canadian dollar rolled over which is starting to add caution to my stance on oil. Nothing broke down, but I did sell one oil stock as it wasn’t doing anything.
Gold stocks had a poor week. I am not happy with momentum rolling over so close to zero. More in the charts below. With the copper miners and gold miners both having some losses but not big, they are cautionary. Freeport McMoRan had the large volume topping day May 10. It’s been a month and the copper chart is stalling around prior highs and the copper miners have been working marginally lower.

Summary: The bond market appears to want dropping yields / higher prices. The Fed meets this week and that coincides with quadruple options expiration on Friday which could increase volatility and volume. I suggest oil continues to bubble. Natural gas is also a positive here. Financials and industrials are starting to be weaker along with basic materials.

For more information click the link below…