Dr. Copper

Copper has been consolidating sideways since 2006. The commodity could be tracing a triangle pattern during this secular correction. Bulls want to see a sustained break above 4.50 to call a breakout. However, another cyclical correction is likely preceding if a triangle unfolds. A textbook pattern corrects between 3.00-3.50 during the next couple of years. …

Lumber

Lumber has been tracing a choppy pattern off its 2009 low. The advance could be an expanding diagonal pattern. Interestingly, momentum diminishes after the strong rally from the 2020 bottom. That’s a hint for a nearby reversal of the bullish trend. Moreover, the pattern is nearly complete. Another marginally higher could become an ending diagonal …

Norwegian Krone

The Norwegian currency reversed from a multi-year low. Last year’s price action broke two key S/R. The pale grey trend channel as well as a double top around 9.60. NOK bulls might want to monitor an actionable 3-wave pullback on the pair. It will likely lead to a long-term appreciation in the Norwegian currency. Another …

Risk On

Excessive levels of investor sentiment are associated with subsequently surprising asset returns to the opposite direction of expectations. The moving average of the CBOE Put/Call ratio charts this relationship over the past decade. The current setting has not only recorded excessive levels of sentiment. Moreover, the environment has been remarkably positive for an exceptionally long …

Marginal Buyer

Retail trading has been among the major drivers of the stock market rally. Easy access to technology/ leverage paired with the “Buy-The-Dip”/ “Fed Put” narratives were essential. The cohort is mostly under 34 and willing to leverage their bets. Moreover, they are using social media as a tool for sourcing trading ideas. Appealing smartphone apps …

Hoods vs. Suits

The newswires have been dominated by the spectacular rise in GameStop most recently. A trading forum on Reddit spread the idea to squeeze short-sellers by channeling liquidity flows into stocks with large short interest outstanding. The strategy worked and GameStop increased almost 3000% in January 2021. Short-sellers had to cover their positions. Consequently, a few …