A Silver Miner Breaking Out of a HUGE Base [DIRTY DOZEN]

It has taken me years to unlearn everything I was taught, and I probably haven’t succeeded yet. I cite this only because most of what has been written about the market tells you the way it ought to be, and the successful investors I know do not hold to the way it ought to be, they simply go with what is. ~ Adam Smith, “The Money Game”

Good morning!

In this week’s Dirty Dozen [CHART PACK] we look at triggering breadth thrusts, a bullish small-cap anomaly, investor portfolio preferences, and why it’s bullish for stocks. We then go through some ratio charts, plummeting nat-gas production, a bullish silver miner breakout, and an EM ETF that looks ready to moon, plus more…

Let’s dive in.

***click charts to enlarge***

  1. The evidence for the bull case continues to build… @WillieDelwiche wrote the following on the below NDR chart “It looks like we can add to the list of improving conditions a new round of breadth thrusts. Over the past 10-days, advancers have outpaced decliners by 2 to 1 (above 1.9 is a breadth thrust) and 89.6% of stocks are above their 10-day averages (90% is the threshold for a breadth thrust). Getting the percentage of stocks above their 50-day average above 90% (currently 67%) would also be a breadth thrust. Historically, breadth thrusts provide a bullish tailwind for equities that can last for up-to a year.”


  1. Small-caps are seeing incredible buying pressure as well with a 10%+ rally in under 2-weeks. SentimenTrader points out that “this kind of rebound typically happens after severe weakness, either on a relative or absolute basis. Either way, there have been only 20 distinct times over the past 40 years when the index shot higher by at least 10% over a 10-day stretch.”


  1. Below is the return dispersion following every other instance over the last 40-years, again via SentimenTrader. It has a strong record as a very bullish signal. And perhaps most remarkable is that the market ran higher over the following month 100% of the time, with a median return of 5.9%.


  1. One significant driver of the fundamental bull case is the gross underweighting of risk assets following the large fiscal stimulus. The newly introduced cash automatically reweights cash/bonds higher relative to stocks. This allocation mix is likely to change in favor of more equities in the coming year — afterall, both cash and bonds are now a negative carry trade! And that’s an incredibly bullish tailwind.



  1. Orders/inventory ratio is signaling a surge in the global manufacturing PMI over the coming quarter.


  1. I don’t know about you but I’m getting a bit tired of these “ratio” charts showing how undervalued energy, materials, commodities etc… are to growth and tech. So maybe this will be the last one I share. Though, I have to say, the macro picture is finally becoming supportive of a coming regime shift over the next 12-months.


  1. Another sign of the times… Exxon, once the largest company in the world, now has a smaller market-cap than NextEra Energy, a renewable energy utility.



  1. Not surprising, as oil has been in a bit of an extended rough patch… COVID took the legs out from under demand but I think we see that change in the next quarter. And then, recovering demand will begin to meet with an increasingly tight supply picture.


  1. @HFI_Research shared this great chart of US nat gas production. This is one reason amongst many on why we’re bullish nat gas and related securities going into 2021.


  1. @TimmerFidelity tweeted last week that “If the current liquidity impulse becomes semi-permanent, history suggests that a massive rotation from growth to value and from financial assets to real assets may ensue. The long “super cycle” for real assets is due for a turn.”

I concur…


  1. MAG Silver Corp (MAG) has broken out of a 13-year rectangle base. The chart below is a monthly. The measured move target is just below $30 a share, which is roughly 50% above current prices. You can find our precious metals framework and long-term bull case here.


  1. We believe we’re in the very early stages of a transition from a Core to a Periphery led regime. This is being driven by a lower US dollar. As such, we should expect emerging markets to soon take over as relative leaders, globally. China A-shares is one such market that you might want to consider adding to your book. A Biden presidency (something I view as highly likely) will be more favorable to China and its equity market.

Stay safe out there and keep your head on a swivel.

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Brandon Beylo

Value Investor

Brandon has been a professional investor focusing on value for over 13 years, spending his time in small to micro-cap companies, spin-offs, SPACs, and deep value liquidation situations. Over time, he’s developed a deeper understanding for what deep-value investing actually means, and refined his philosophy to include any business trading at a wild discount to what he thinks its worth in 3-5 years.

Brandon has a tenacious passion for investing, broad-based learning, and business. He previously worked for several leading investment firms before joining the team at Macro Ops. He lives by the famous Munger mantra of trying to get a little smarter each day.


Investing & Personal Finance

AK is the founder of Macro Ops and the host of Fallible.

He started out in corporate economics for a Fortune 50 company before moving to a long/short equity investment firm.

With Macro Ops focused primarily on institutional clients, AK moved to servicing new investors just starting their journey. He takes the professional research and education produced at Macro Ops and breaks it down for beginners. The goal is to help clients find the best solution for their investing needs through effective education.

Tyler Kling

Volatility & Options Trader

Former trade desk manager at $100+ million family office where he oversaw multiple traders and helped develop cutting edge quantitative strategies in the derivatives market.

He worked as a consultant to the family office’s in-house fund of funds in the areas of portfolio manager evaluation and capital allocation.

Certified in Quantitative Finance from the Fitch Learning Center in London, England where he studied under famous quants such as Paul Wilmott.

Alex Barrow

Macro Trader

Founder and head macro trader at Macro Ops. Alex joined the US Marine Corps on his 18th birthday just one month after the 9/11 terrorist attacks. He subsequently spent a decade in the military. Serving in various capacities from scout sniper to interrogator and counterintelligence specialist. Following his military service, he worked as a contract intelligence professional for a number of US agencies (from the DIA to FBI) with a focus on counterintelligence and terrorist financing. He also spent time consulting for a tech company that specialized in building analytic software for finance and intelligence analysis.

After leaving the field of intelligence he went to work at a global macro hedge fund. He’s been professionally involved in markets since 2005, has consulted with a number of the leading names in the hedge fund space, and now manages his own family office while running Macro Ops. He’s published over 300 white papers on complex financial and macroeconomic topics, writes regularly about investment/market trends, and frequently speaks at conferences on trading and investing.

Macro Ops is a market research firm geared toward professional and experienced retail traders and investors. Macro Ops’ research has been featured in Forbes, Marketwatch, Business Insider, and Real Vision as well as a number of other leading publications.

You can find out more about Alex on his LinkedIn account here and also find him on Twitter where he frequently shares his market research.