By J.C. Parets & All Star Charts
Wednesday, 28th December, 2022
1/ No Blue SKYY Ahead for Cloud Computing
2/ Commercial Vehicles & Trucks Deliver
3/ Natural Gas Brings the Heat
4/ Gold Around the World
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1/ No Blue SKYY Ahead for Cloud Computing
Since the early summer, many of the weakest stocks and indexes in the U.S. equity market have been stuck in sideways ranges. These lagging indexes are comprised of long-duration equities and the most speculative growth stocks.
2/ Commercial Vehicles & Trucks Deliver
Although the stock market has experienced downside volatility most of the year, there are still pockets of strength in this cycle.
The resilience of the Dow Jones Commercial Vehicles & Trucks Index continues to impress us.
The index has been trading in a well-defined range since 2021 and is currently pressing against the upper bounds near all-time highs. This is not something many industry groups can say right now.
If and when selling pressure diminishes, we could expect this group of stocks to lead the way higher. We like to refer to this as the “beach ball effect.” The most buoyant market areas tend to rally the strongest once broad downside volatility eases.
3/ Natural Gas Brings the Heat
If you’re on the prowl for volatility, look no further than the widow-maker itself: natural gas futures.
Natural gas dropped more than 10% in today’s session alone, completing a multi-month topping formation.
Notice, the failed breakdown in late October led to a rally that carved out the right shoulder of a classic head and shoulders top. It turns out that the failed breakdown was actually a false start.
Of course, it’s easy to look back with clarity. However, the false start and the sideways action that preceded it reveals the difficulty in trading range-bound markets.
It might be best to wait for a decisive move either up or down. For now, the breakdown in natural gas suggests the path of least resistance could be lower.
4/ Gold Around the World
The USD dominates global trade, and of course we would want to witness a break to fresh all-time highs priced in U.S. dollars—but when we look around the world at other major currencies, gold has already broken out!
This is what gold looks like when we remove the U.S. dollar bias:
Source: All Star Charts, with data provided by Optuma
It’s the same story no matter where we look. Gold priced in every major global currency trades above its prior cycle highs from 2011—except the U.S. dollar.
It could just be a matter of time before gold resolves higher priced in USD.
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Originally posted 28th December 2022
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