1/ Top in High Yield Index to Support a Broad Bull Market
2/ China Starts New Bull Market
3/ Precious Metal Stocks Confirming Strength in the Metals
4/ A Better Way to be Long Crude Oil
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1/ Top in High Yield Index to Support a Broad Bull Market
It appears the High Yield index has spent two years building a complex Head and Shoulder top. A break below the Neckline will support stronger and broader stock gains.
2/ China Starts New Bull Market
Similar to the US stock markets, the Chinese Hang Seng topped in 2021 and entered a bear market. Unlike the US markets, its drop has been far more severe, and the rebound has been non-existent—until now.
After successfully retesting the 2022 bear market low, the Hang Seng Index has broken a significant downtrendline with force. This noteworthy move highlights the transition of the Hang Seng Index back to a bull market.
3/ Precious Metal Stocks Confirming Strength in the Metals
Unlike other breadth indicators, net highs/lows provide a reading of a more significant event. Unlike studying advancers vs. decliners, a 52-week high or low requires conviction by the buyer or seller to pay the highest or lowest price of the year.
Therefore, when an index has more stocks making 52-week highs vs. 52-week lows, it indicates conviction by buyers.
As you can see, many net 52-week highs in gold and silver miners have confirmed the recent powerful uptrend in precious metals. This helped identify that the price drop was more than a mere bull trap.
Courtesy of TrendSpider
4/ A Better Way to be Long Crude Oil
Recent advances in copper, gold, and silver have left crude oil investors feeling left out, as it remains in a correction. However, the market is signaling that there may be a better way to invest in a Crude Oil rebound.
As you can see in the chart, Oil Services stock FTI is strongly correlated to Crude Oil. However, investor demand has resulted in the stocks sitting just below 52-week highs despite the pullback in Crude Oil. Given this relative strength, an investor looking for exposure to Crude Oil should consider FTI as a better alternative.
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Originally posted on May 21, 2024
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