“The most effective and functional trading belief that he can acquire is “anything can happen.” Aside from the fact that it is the truth, it will act as a solid foundation for building every other belief and attitude that he needs to be a successful trader.” ~ Mark Douglas
Good morning!
In this week’s Dirty Dozen [CHART PACK] we look at Europe with a 21-year breakout, airlines in a bull trend, buy signals in tech, consolidated positioning nearing a zenith, soybeans at an inflection, the peso (MXN) going into elections, and monthly stock charts with great setups, plus more…
Let’s dive in.
***click charts to enlarge***
- Ari Wald, a seasoned technical analyst at Oppenheimer, shared some great charts on Bloomberg this past week. Here’s the SPX on top and RTY below. Both are coiled tight and ready for a run higher.
- Europe’s stock market just broke out of a 21-year sideways consolidation.
- This final one from Ari shows Airline stocks stair-stepping higher. We’ll see how long this trend will last if oil breaks out higher (which I expect it will).
- @MacroCharts tweeted about the recent underlying strength in growth stocks, writing “Important strength in Growth Stocks: One-third of Nasdaq Stocks have triggered Buy signals – the most since March 2020. Most spikes of this magnitude led to bottoms or *big* rally extensions. A textbook Bull Market response after a sentiment capitulation – follow the Trend.”
- I’m bullish over the very short-term but believe we’re nearer the end than the middle of this leg of the bull rally. One more leg up should be enough to get players over their skis…
- USDJPY is trading in one of its tightest two-month ranges in 50-years. Compression regimes lead to expansionary ones (big trends).
- A few weeks ago we talked about the near-record high aggregate speculative positioning in Ags. A number of these charts are starting to pull back from extended levels. Soybeans recently crossed above 2.5 on its weekly SQN. There have been 5 instances over the prior 60+ years and 4 of them led to lower prices a few months later.
- China’s been seeing a pickup in flows and these inflows are leading to a rise in MACD buy signals within the SHCOMP. The chart is bullish and the long-term trend is up.
- The Mexican peso is coiled and setting the stage for a break higher. Barclays notes that the peso has been trading weak into the coming election, which is typical, but a relief rally should follow after the vote.
- I’ve shared this one before but figured it’s time for an update since it’s starting to run.
Trilogy Metals (TMQ) is a mining company with a large interest in copper, zinc, lead, and gold/silver projects in Alaska. The stock is breaking out of a 7-year cup-n-handle (chart below is a monthly). Seth Klarman’s Baupost Group is one of its largest investors.
- Babcock & Wilcox Enterprises (BW) is a company focused on renewable energy solutions with a great monthly chart and lots of insider buying over the last year. I’ll be digging into this one over the coming week.
- GSM produces advanced metallurgical products. The stock has been on a tear over the last 6-months and looks to be gearing up for another run. We haven’t yet done DD on the company but it’s on our short-list to dig into.
Stay safe out there and keep your head on a swivel.
