The following is an excerpt from North Star’s bi-monthly letter ‘The Rotation Report’
We’re seeing signs of a stall out in economically sensitive commodities.
The 10 week moving average trends in many energy commodities have quickly gone from up-trending to flat.
This is notable as the dominant trends via the 200 wk MA are lower.
Moving to industrial metals, all of a sudden we see multiple weekly topping tails and signs of exhaustion at notable resistance levels.
The trends are still higher, but this cluster of action is not a coincidence.
Looking at Materials Sector Relative Strength, we see it rolling over relative to the S&P 500 ETF SPY. Is further underperformance in the cards?
Our conclusion is this is a quality profit taking time and place in commodity plays. Agile traders probably want to short or get out. Long term portfolio managers probably want to check and reduce their exposures.
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