It sure seems like there is a lot of bull in the markets, but it has been very selective. Recently ANET got rammed upward on Nvidia’s AI hype. I had to take the profit. Semiconductors have been strong (I took a profit on INTC) and I held ASML and AEHR, despite the accumulating paper profits. Still holding a couple other Tech related things and a few other odds and ends generally not within the commodity/inflation trades sphere (although I did add Li play LTHM today). In other words, generally in the Goldilocks sphere.
Other things had been bearish and technically, IMO, still are. Things like Materials (I’m still short), Energy is suspect (I’m short), Metals & Miners (XME) are still bearish (I’m short). In other words, the commodity stuff has not proven much. If it starts to undo the bearish technicals, I’ll get out of the way. I would not want to lose the profits from the short side.
Copper miners are bouncing, industrial metals as well. However, my favorite of the outliers (Lithium, REE, PGMs, etc.), uranium, put on a laser show today to undo some of the sector’s technical damage (while CCJ held its intact technicals and furthered them). I decided not to FOMO it, but I may have to because like the gold miners, it’s a situation that I am fundamentally engaged with (the funda indicators have held up this week).
Speaking of gold miners, I covered the DUST hedge today for a reduced profit because I am weak as a short by definition since I am still bullish the sector (as long as the funda remain intact). I’ll be nimble and re-hedge if need be. But GDX had large volume these last 2 days (of course the days I’m on the road and completely occupied). So I covered and even increased a couple positions (HL yesterday and SILV today).
The GDX sub-28 gap may or may not fill. Personally, I thought it was a shoe-in. Now I’m not so sure. It could have been a breakaway gap with a lot of up volume around it and it was the thrust that turned the daily trends up.
As for the index noted in the title, despite the bullish stuff selectively going on out there it is still bullish but merely sitting above the moving averages. However, it did fill the 4219 gap yesterday and closed above it today. The favored SPX target is 4219 to 4300. So regardless of what the gold stocks do in the very short-term, I’d like to see the broad market top out at the preferred SPX target zone (less favored is a continuing party to 4700) in the coming weeks and for gold to re-start its out-performance vs. broad stocks (and commodities).
As to commodities, the US dollar is suspect right now. So our alternative view is that if USD breaks down a global inflation trade could erupt sooner rather than the later currently expected. If stocks top out and start to tank that would drive liquidity in USD, capping commodities. A lot of balls in the air and a writer discussing it all before really plugging back in with a good sense of the noise out there regarding the damn debt ceiling drama. All of this with FOMC oncoming.
The above are some observations from an investor who is probably not as well educated as he will be in a few days. But these are my initial thoughts as I plug back in and try to get a handle on a particularly noisy environment with a headline index now in the target zone to the rally that ground into being back in Q4, 2022.