Thursday July 19, 2012
We have reminded readers to watch crude oil as the lead dog in the race.
As noted in the Performance chart yesterday, XES Energy Service is breaking out first, FCG is up as well. Others like COPX are still lagging, XME has a nice rounded bottom on the chart.
Yesterday I noticed a tagline on CNBC, Will the Euro Survive? Intoday's WSJ is an op ed that there is nothing wrong with the Euro, rather it is a Spanish Portugal Greek debt problem which is true. Point is, these are the sort of headlines that herald a bottom in the Euro that is.
An old saying has it that 'there is always a fundamental event to validate the technical picture.' In other words, in perhaps the next few trading days we will see a headline like
New Accord Sparks Euro Rally or
Crude Rallies on Renewed Demand (never mind that it is already up $12)
Investors Shun Bonds for High Tech Rally
Recall that within the last sixty days everyone was certain natural gas would fall below $1.50. No one was buying semi conductor stocks, until everyone was buying them yesterday. The dramatic reversal in social mood is always amazing.
There is not much else to add at this point. We hope you are well prepared to profit from the upcoming rally in commodity related stocks. The Dollar and TLT are coming off their highs ever so slowly.
SPX is only off its February -March high by about 5%.But bonds are near all time highs, this is irrational to say the least. Everyone has expected 2008 to happen again. Again, as we say, those ships must leave the Safe Harbor of Bonds and venture back into the High Seas of Stocks. Once long stock positions are widely held by the public, and we see headlines like
How to Play the Semi Conductor Rally Now (this will appear after Semis rally for a couple of weeks)
We will know the rally is about to run out of steam.
I have a professional accounting meeting this morning, back later this afternoon.