A bullish note from the guys again this week for US and European equity risk markets with a focus on the cyclicals and rotation back away from defensives. Given the impressive recent breadth its all very reasonable technical comment in my opinion also.
Worthy of more comment is the commodity space. Commodities bottomed well in advance of any US$ weakness and now with US$ weakness we see some significant weakness for the commodities. The AUDUSD is a better indicator and this is clearly not correlating, for the moment to wider US$ basket weakness.
Mean correlations should play out here once the dollar direction is established, especially given TIPs relative sustained strength. The guys pick up on the gold tech but its worth considering copper, particularly her miners as well as silver and her miners. Both metals and especially their miners looks oversold here and close to a bounce area of their respective charts. Allocation sizes should respect their beta nature I’d just add.
To the reports and here the guys latest, released earlier today, due to holidays:
And here a super equity mkts bullish Fitzpatrick picking up on the commodity troubles also :
And here a near term tactically less bullish Meisels:
And here Commerz with their bullion technical report, some key supports at these price levels :
My book quickly came off last week’s new high due to the weakness in commodities inc oil and particularly silver and copper miners. As above, we are looking for trend direction here in the coming weeks as we are in critical price areas. Lets see. US$ the data is supporting the US$ weakness given the GDP print and FED dovish tones although Euro data meeting expectations almost no likely hood of Draghi raising rates. For the moment the overnight spread remains in the US$ favor and markedly so. Nonetheless perhaps the euro does have legs after all but as yet i’m not shifting the allocation in her favor at present. Alongside commodities I will review fx allocations in the coming week. It would be nice to see some decent trends emerging again in the fx space to add a tailwind to performance numbers but you cant force these things.
All the best
Rich