Could Russia-China Bromance Trigger a Supercycle in Commodities?
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The market buzz can be pretty contagious.
“Market didn’t collapse on the bank news-must be bullish.”
“Yellen will save the day buy making sure depositors are safe.”
Yellen herself- “We have an economy that is performing very well.”
And, of course, we all know that tomorrow is the big FOMC day with a 0.25% hike to a pause on the table.
Meanwhile, far away but not SO far away, we have the bromance between Putin and Xi.
And they are creating contagious sentiments.
Looking at the S&P 500 chart on a weekly timeframe, SPY needs a weekly close over the blue line or the 50-week moving average at 395-396.
SPY Weekly Chart
That would put the index in a bullish phase.
Even then, the hurdles of the persistent trading range using the 23-month moving average remain.
Furthermore, the Real Motion indicator shows that the SPY has not cleared the blue line (50-WMA) since January 2022.
Momentum is HUGE here and worth watching. As our everybody’s favorite index along with some choice names NASDAQ Composite.
But back to our burgeoning bromance. Making some headlines of their own, such as:
“Russia-China Joint Statement: We are seriously concerned about U.S. Military Biological Activities Carried Out on Their Territory and Abroad,”
“China has shipped more than $12 million in drones to Russia since it invaded Ukraine”, per NYT.
“In the year since Russia invaded Ukraine, roiling energy markets across the globe, China’s appetite for Moscow’s oil, gas and coal has grown apace, with imports rising by more than half.”
“Russia says it’s close to reaching its pledged 500,000 b/d oil production cut-Moscow adds that it will sustain the output cut until July.”
“China is giving a handful of its most successful chip companies easier access to subsidies and more control over state-backed research, as tightening US controls on access to advanced technology force a major rethink in Beijing’s approach to supporting the sector.”
Can this amount to much?
Yes.
Will it?
I have not changed my mind about chaos and a potential Supercycle in commodities.
And I am far from alone.
“Goldman Sachs expects a commodities Supercycle driven by China and the capital flight from energy markets and investment this month after concerns triggered by the banking sector. As losses mounted, it spilled into commodities.”
As always, the price pays the most. Open-mindedness pays the big bucks, and opportunities are always there.
Risk/reward matters most.
ETF Summary
- S&P 500 (SPY) 400 key resistance now
- Russell 2000 (IWM) 170-180 range now
- Dow (DIA) Still has work to do-324 the 200-DMA to hold
- Nasdaq (QQQ) 328 is the 23-month MA resistance and is now a bit overbought on the indicators
- Regional banks (KRE) 44 support 50 resistance
- Semiconductors (SMH) New high then retreat-no confirmed reversal through yet
- Transportation (IYT) Holding the 200-WMA but has to clear the 200-DMA at 224
- Biotechnology (IBB) Over 127.50 Impressive
- Retail (XRT) 60 ample support and 64 considerable resistance
