The NY Fed’s Empire index is the latest in a line of strong manufacturing reports. Several ‘global vs. US’ stock market charts are looking prospective, and then of course there is the bullish monthly chart of Industrial metals, as noted in NFTRH 469 and the big picture monthly chart post last week.
The yield curve continues to be benign for economy and stock market bulls and not at all helpful for gold bulls. I noted I’d have caution on the golds due to their heaviness on seemingly in-line results and indeed I have put action to that, taking more profits and limiting a couple losses. The sector will be ready when it is ready and we have been noting a seasonal trend that grinds (on average) from October through year-end. As always, I keep my eye on the sector and want to be bullish, but the data that are coming in are not gold bullish at this time. That said, HUI closed at 199.71, still well within the key support area of 195-200 and above the weekly EMA 55 (198.43). As such, I am holding the ones I don’t want to get rid of if I don’t have to.
What is bullish are some weekly charts I want to put in front of you. In line with bullish Industrial metals (GYX, per the link above and NFTRH469), a positive global growth backdrop and the bullish view of the Canadian TSX I decided not to try to buy Canada after all. I decided to do what I’ve been talking about and buy RIO, and also start positions in BHP and FCX (not Canadian, but work with me here) along with Canadian miners TECK and FM.TO. RIO, FCX and FM.TO are former holdings of mine. BHP and TECK are new. These were taken on the afternoon fade in these items.
This seems like a way to buy ‘Canada’ without buying the whole country. I am starting with relatively modest individual positions in order to diversify among several different ‘resources’ companies.
First let’s look at Industrial metals vs. SPY. The grinding uptrend off a bottom in 2015 has been going on for 2 years.
RIO never quite tested the neckline before turning back up. As noted, I’d probably end up chasing and that is what I did. If GYX targets 440 as already noted, then I don’t think it would matter much about entry here. This looks like a very bullish pattern.
BHP is a little less attractive, but still attractive none the less.
FM.to has not broken out but I like the chart. Especially since it’s theoretical right side shoulder is actually a smaller pattern within the pattern. It’s above the baby pattern’s neckline.
Frankly, I did not see as attractive a chart in TECK’s weekly view, but the monthly had me say ‘what the hell?’ and take a shot with it. It needs a rise above 26 to activate a target up around 48.
FCX is another that did not overly inspire me. But again, my goal is to diversify in items that would benefit from continued global growth. So it’s bought more for balance than the chart.
I am going to continue thinking about the global growth play as relates to the bullish GYX/Industrial metals complex and any other logical areas we can uncover.
I am also going to move ahead with the theme of edging away from US overexposure. We’ve noted several constructive charts vs. the US, like Russia, Canada, China, etc. Well, how about this one? We’d noted a bullish monthly chart of the nominal Nikkei and the currency hedged Japan ETF vs. SPY seems to agree that risk vs. reward favors Japan over the US. As noted would probably be the case, I added the currency hedged DXJ to the unhedged EWJ this morning.
We’ll have more to come as these themes move forward, assuming current trends remain in play for a while yet. The Industrial metals do seem to have further to go and Japan seems like a good relative play. I made a post noting that things seemed to stop working as well for me lately and this is part of ongoing rebalancing as our work fleshes out the trends that are working, along with what is not working or in relatively poor risk vs. reward setups.