Commodities are starting to break down again. In every bull...

Commodities are starting to break down again.
In every bull market since 1960, at least 85% of commodities have exceeded their 200-day averages. The absence of this scenario raises a caution flag regarding the uptrend that began in February 2024.
https://x.com/DeanChristians/status/1807022273271824711

...and you can see from below that I have had on several occasions cautioned about getting involved in commodity/resource stocks.
...those who are (involved) need to hope for a large and unexpected stimulus from China when Xi meets his central planners in mid July.
...for those who do not like developments in China, yet chose to invest in resource stocks, know this - resource stocks fortunes are closely tied to China (not Wall St). Its relative underperformance reflects the economic struggles that China is facing today. Resource stocks stale bulls need to have a little prayer that China elects to embark on the bazooka stimulus again. Why hasn't China done so if that was the perfect easy solution to its problems?

I wrote on 18 June 2024
Its Over, 74378754, page-22369 | HotCopper Forum
...for the superstitious.

The last time the Boston Celtics won the NBA Championship, Lehman Brothers declared bankruptcy and the global economy collapsed within 3 months. Adjust your risk models accordingly.

https://x.com/TrungTPhan/status/1802902111098671237

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if we do really have an event this Q3-Q4 this year, there won't be enough time for all resource stocks including gold, silver, copper, oil, lithium, coal stocks to recover before a severe corrective wave.

3-4 months isn't ample time for any meaningful recovery even if US equities continue to melt-up/

The sell into strength opportunity has passed, the time when I mentioned it a few months back when I said to avoid all resource stocks (until precious metals offered some inspiration then with China buying, that flame too has flickered).

I wrote on 1 May 2024
Its Over, 73614144, page-21601 | HotCopper Forum
A lot of commodities getting smoked today

https://x.com/WinfieldSmart/status/1785280119042363506

...if you can see Demand Destruction on the way, you'd see the need to avoid resource/commodity (ex-gold) stocks.

I wrote on 18 March 2024
Its Over, 72944568, page-20781 | HotCopper Forum
....those who like to pick bottoms need to be careful, as fund manager Elio D'amato used to say 'if you pick bottoms, you may get smelly fingers'.

.....there are reasons why stocks are at their bottom, which can entice market participants hoping to get value, 'value that they can see and the market is blind towards', maybe but unlikely.

....this thread has cautioned weeks ago to avoid resource stocks, because the down cycle is not over, China is not out of the woods, refusing to do a bazooka stimulus which can help resuscitate the sector and US recession is possibly months away (within 12 months), if we can't be patient enough to wait until the down cycle is over and we get green shoots, then the prospect of more pain after a huge shellacking is not out of the question. It is because we follow the day to day movement of the stock and get encouraged by any short term upticks that emboldens us to enter for fear of missing out. A stock which has halved from the peak could easily correct to the upside by 10-20% before falling back another 30-50% again.


I wrote on 26 Feb 2024
Its Over, 72606385, page-20453 | HotCopper Forum

..those who have been following this thread would know by now that its central tenet is to be very wary about Buy and Hold, more so in the ASX universe.

...in the US, Buy and Hold carries a little more sense because they have truly global and scalable MNC brands/moats and superior technology second to none. In Australia, we have only few globally notable companies and we are largely resource driven and resource companies are essentially price takers, not price makers.

...Buffett himself knows that if you just Buy low and not knowing to sell high and keep holding, you won't optimise your return. He has recently sold down his Apple shares. And one more thing, Buffett's portfolio returns used to be excellent in the 70s, 80s, 90s but it became just above average for most part of 2000s - simply because the market now is less fundamentally focused and more speculative which he himself admitted.

...from my own observation today, exuberance can just be found in lithium, gold, rare earths, the usual suspects, it is like we are so narrow or that we have limited choices...so people continue buying those sectors without even caring about their macro outlook and risk reward at this point. They may be up 5-8% today, and losing it back the next day or two, and merry go round, but by the end of the month, it could still be lower.

...and yes I concur Buy and Hold is Dead. And a big wake-up call could be just ahead for Buy and Hold market participants.

I wrote on 8 March 2024
Its Over, 72821955, page-20611 | HotCopper Forum
.despite ASX making new all time highs as does the S&P500, it is not a rising tide lifting all boats.

1. XJO has underperformed S&P500 by 3x YTD
2. Resource stocks (in bold) severely underperforming, as I cautioned to avoid
3. XJO's gains is all about the big banks, where longs are flocking to as if its the only game in town
4. Two of the darling sectors of ASX, lithium and gold stocks aren't getting the love- XGD underperforming to Gold and AUD Gold on a YTD basis; lithium stocks following Tesla's lead lower
5. NVIDIA and META have been two standouts

..Indices don't matter, we now know. But if they run, and your sector does not, that's rather troubling. Speculative money is trying to find a home in ASX but is running out of ideas when gold and lithium stocks aren't so much in play.
..the lack of exuberance in ASX is reflecting the difficult state our resource sector is in now, no matter that Wall St is going gangbusters. We might as well retreat and find a better time to put our capital in harm's way as risk-reward is not favourable.