Inflation trade holding well

Since May, growth stocks began showing strength while red-hot commodity sectors started showing weakness. This post from June made the case to lighten up on commodities due to: Energy stocks + Canadian dollar were at major resistance, bond yields were breaking down, and Bitcoin fell 50% in May.

After a turbulent June, there’s evidence now that the inflation trade has stabilized and could be getting going again. Let’s take a look.

Broad Metrics

CRB, Monthly. This broad commodity index bounced after retesting a 12-year support level earlier this month.

RINF, Monthly. Inflation expectations retested 6-year support this month.

Specific Assets & Sectors

REMX, Monthly. 8yr base breakout this month. REMX is now the strongest ETF on my ETF leadership board.

SLX, Monthly. Nice consolidation after an 8yr breakout. Another momentum leader like REMX.

As seen below, Bitcoin has been trading with commodity sectors. It was the first shoe to drop, and was followed by weakness in many other commodities in June.

The recent bounce in Bitcoin didn’t happen at some random level. Bitcoin held a 3yr support level relative to the S&P 500:

Bonds

Finally, I want to show a weekly chart of IEF. It has run up to resistance. Falling bond prices (ie. rising bond yields) tends to happen when inflation picks up.


Important DisclaimerThis blog is for educational purposes only. I am not a financial advisor and nothing I post is investment advice. The securities I discuss are considered highly risky so do your own due diligence.