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Market review 22.06.19
Energy, softs, gold, and tech
I’ll review energy, softs, gold, and a couple tech names today. But first, a look at the broad landscape:
This week, energy took a major hit. UNG, PSCE, and XOP each fell more than 20% - the worst performing non-leveraged ETFs on the week.
XEG Monthly. We looked at this chart last week. The breakout attempt got derailed – and it will be important to see where we close the month.
Longer-term, the action in the oil sector is bullish. Gasoline futures are still above a major base breakout.
Ditto for ENB. This stock pays a 6.5% dividend yield, and the dividend has been growing 10% annually for the past 3 decades.
The hit to energy is coming a week after shipping stocks got knocked down, and 2 months after potash, copper and steel stocks peaked.
But one area within commodities that’s still standing are the softs, especially corn.
Last week, I discussed gold.
The futures positioning is getting more interesting each week. Commercial hedgers currently have their highest net long position in gold and silver in several years. This positioning may continue to climb while the precious metals form a bottom. In late 2018, hedgers became net long gold and silver before both metals surged over the following 2 years.
However, charts for silver miners, real bonds, and REITs (eg. LAND) are still a big mess. I need to see breakouts before I get interested.
Rising interest rates have not only been plaguing gold, but of course tech stocks.
But look at what’s holding up the best right now in tech - it’s video game stocks.
Specifically, EA stands out. Here’s the monthly chart showing a major multi-year base forming within an uptrend.
Biotech showed some relative strength this week. Here’s a monthly chart for ARGX which looks to be a promising new long candidate if it can clear resistance.
Take these tech setups with a grain of salt.
QQQ is in it’s largest drawdown over the past 10 years and interest rates are making multi-decade breakouts. This is a different ball game than the one we’ve become conditioned for.
It remains a very treacherous market out there – with thin leadership and high volatility.
Stay safe out there!
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.