Good morning, everyone.
The price action this week only added to the risk-off message in my last several posts. Today, we’ll look at some updated charts from last week as well as some new ones.
These blog posts build on each other so please be sure to read each one when they come out. Let’s dive in.
The biggest ETF movers this week were:
GDX +6%, KURE +6%, PPLT +4%, GDXJ +3%
ARKK -10%, MJ -9%, WCLD -8%, IGV -5%
And here’s where our ETF leadership board stands:
The ARKK ETFs are back near 52-week lows. Meanwhile, uranium and bitcoin are still hovering near the laggards area. Their charts remain weak.
Among the ~70 ETFs on this chart, the one closest to its 52-week highs is GLD. This makes sense, as gold thrives when stocks chop. I discussed the relationship below back in May in more detail.
We’ll circle back to gold later, but first I want to touch on tech, financials, and industrial commodities.
BUG Weekly. Cybersecurity has stalled at resistance.
ROKU Weekly. We looked at this chart last week as it was pressed against resistance. After an earnings report and general weakness in tech, ROKU fell 35% this week.
Other former tech darlings that fell heavy on their earnings this week include: SHOP, FSLY, RBLX, and PLTR.
BLK Weekly. We looked at this breakdown in the last post. It turns out, BLK is the Russell 1000 stock with the highest correlation to the SPX according to this tweet from Chris Verrone at Strategas. Below this chart level, we want to remain risk off.
For many months now, the strongest ticker on my ETF leadership board has been KRBN. But it’s now showing a failed breakout on the weekly chart.
RINF Weekly. Long-term inflation expectations are breaking down.
In the last post, I discussed how oil monthly charts hit major resistance (XEG, CVE, TOU). Now, weekly charts are starting to breakdown. Here’s ENB Weekly.
Like oil, copper stocks have run into major resistance. Here’s the monthly chart for FCX, the third largest copper producer in the world by production output.
Last week, I showed the breakdown in BTC:GOLD ratio. This week COPX:GDX failed to hold its breakout.
This is a key development, as this ratio is highly tied with TNX (10yr bond yields) and KRE:SPY (banks vs. stocks).
This nicely transitions us back to …
While risk assets are struggling, precious metals & miners had a great week. Here is the GDX Leaders Index showing strong upside follow-through after last week’s breakout:
We looked at the breakout in GFI last week. It’s up 15% this week and now at 52-week highs.
Barrick Gold, Weekly. The 2nd biggest gold producer reported earnings this week, raised dividends and announced a share buyback. The market loved it and the stock made a strong breakout.
SPPP Weekly. This ETF containing 50% platinum and 50% palladium made a breakout.
Gold Weekly. The next development we want to see is for spot gold to breakout from this important level a little above $1,900.
Price action continues to tell us to be cautious risk-assets, and to favor gold.
I should note, however, that this correction in risk assets is likely short-term. As dire as the weekly charts for stocks & industrial commodities look currently, keep in mind that:
We only recently had multi-decade breakouts in global indices (eg. Canada), value indices, and industrial commodities (eg. steel, oil, etc.).
AAII is at extreme pessimism that we’ve only seen twice before in the past decade.
Of course, I will wait for the price action to tell me when to get long risk assets again.
That’s all for this week. If you found this post useful, please give it a like and share. Thanks for reading.
Important Disclaimer: This 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.