Yearly Charts Point To A New Bull In REAL Assets [DIRTY DOZEN]

“Incorporating percentages or ranges of alternatives into the expression of our beliefs means that our personal narrative no longer hinges on whether we were wrong or right but on how well we incorporate new information to adjust the estimate of how accurate our beliefs are.” ~ Annie Duke, “Thinking in Bets

***Note: Just a heads up, since a number of you have been asking about it. Our end of year enrollment into our Collective kicks off today and will be running into the end of the week.

The Collective is our full-kit soup-to-nuts service that provides research, theory, and a killer community that consists of dedicated traders, investors, and fund managers from around the world. We’ve been told that there’s nothing else like it on the web. If you’d like to tackle markets with our group (whom, I should note, has been having a great year in markets), then just click the button below and sign up. And, as always, don’t hesitate to shoot me any Qs!***

Good morning!

In this week’s Dirty Dozen [CHART PACK] we look at yearly charts  — I know, I know, the year isn’t over yet but I couldn’t wait… Anywho, we cover major long-term breakouts in emerging markets, bullish setups across Ag, metals, bearish USD crosses, and more…

Let’s dive in.

***click charts to enlarge***

  1. Let’s start with 2021 analyst targets for the SPX. @ukarlewitz writes that “Strategists expect $spx to gain 9% to 4030 in 2021. No one expects a decline. A month ago, their target was 3900. That’s how this works.”

  1. Here’s the yearly chart of gold. Would you buy or sell this chart? The answer is pretty obvious to me.

  1. I love long-term charts because they show you how the BIG waves of supply and demand are shaping up. With that in mind, what do you think about this chart of copper?

Just for a point of reference, EVs use roughly 6x the amount of copper as ICE vehicles. Meanwhile, copper along with the rest of the commodity space has seen CAPEX slashed over the last 5yrs+.

  1. FX trends tend to last years once they get started. And it’s fair to say the bear trend in the USD has begun. Will we see sharp reversals along the way? Of course… I’m keeping an eye on the 18’ low that DXY is approaching… But, I expect USD to trade below 80 within a couple of years’ time.

  1. GBPUSD is one of my favorite DM crosses at the moment. It’s well below its long-term average and now has Brexit largely out of the way.

  1. AUDUSD is another looker… It was strongly rejected by its 35-year support level (grey area) and is going to benefit from the coming bull market in commodities.

  1. Ag charts are breaking out of multi-year bases. This is likely the start of a major trend. Jeff Currie, Goldman Sachs’ Global Head of Commodities Research, writes (emphasis by me): “Every single commodity market with the exception of wheat is in a deficit today… We think the market’s going to be in substantial deficit throughout the end of next year and beyond into 2022… You have structural under-investment in supply — we call it the revenge of the old economy. It’s not just oil, it’s metals, mining, the entire old economy has shortages in investment, such broad-based deficits are usually only seen late in the business cycle, underscoring the unique environment markets are in. Given that inventories are drawing this early in the cycle, we see a structural bull market for commodities emerging in 2021.”

We concur.

  1. Emerging markets have broken out of their 12-year wedge…

  1. We’ve been talking about this one for months, but the yearly chart of the Nikkei is just *chef’s kiss*.

  1. The DAX ain’t looking half-bad either. It’s breaking out of a 4-year trading range.

  1. Rising fiscal spending, a falling US dollar, budding commodity bull… These should all lead to a steepening of the curve. Bonds have been coiling tight as of late. A breakout is coming. Keep your eyes peeled!

  1. The best-looking charts we’re seeing right now are mostly those that deal in real assets “old economy” stuff. Here’s one of CVR Partners (UAN) which is a US-based producer of nitrogen fertilizer products — a beneficiary of the bull market in soft commodities. It has a tiny float of just $7mn shares and insiders have been buying.

***Note: Just a heads up, since a number of you have been asking about it. Our end of year enrollment into our Collective kicks off today and will be running into the end of the week. 

The Collective is our full-kit soup-to-nuts service that provides research, theory, and a killer community that consists of dedicated traders, investors, and fund managers from around the world. We’ve been told that there’s nothing else like it on the web. If you’d like to tackle markets with our group (whom, I should note, has been having a great year in markets), then just click the button below and sign up. And, as always, don’t hesitate to shoot me any Qs!***

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