The Metals Had People Excited Today, So, Let's Look at Those
Gold, Silver, Palladium. Let's check in on what's made investors frothy.
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The Market
Some days it’s hard to know where to begin but we may as well start with the metals since that was what got everyone excited today.
I can make a list of reasons Gold needs a pullback but let’s just say that it was nearly all anyone talked about today. Yet did you see our friend Palladium? Up nearly ten percent on the day. While I love that sort of move it feels as though folks have moved from ‘safe’ gold to ‘speculative’ palladium.
But let’s talk data. In other words, let’s talk DSI. Despite this amazing run in GLD the DSI is at 86. I would remind you we saw it at 88 a few weeks back. Still no reading over 90, as frustrating as I know it is for traders.
Silver is at 77. It was in the upper 80s not long ago. Platinum which we haven’t discussed much but I was asked about PPLT not long ago (bullish) is now at 84.
Palladium soared though and its DSI is now 83. You already know I have liked (PALL) for quite some time, and we were even buyers on that dip to 101 a few weeks ago but I want to show you the five-year chart, with volume because that is the sort of volume that can either be the beginning or the end. What I hope it is, is that PALL has reached into the initial target area of 130-140 and will now slowly deflate and give us another buying opportunity. Especially now that everyone with a chart sees PALL (where were they before this?!)
The other thing I think we should touch on is the financials. I have noted for a few weeks now that there are issues there. First, we saw it with Moody’s, then we saw it in the asset managers and today Jeffries (JEF) took it on the chin. The Bank Index closed at the lowest close since late August. There is decent support at the 145-146 area but the Bank Index has not made any progress in this big run up. That means most of the Mag 7 and the banks, have begun to lag.
Lastly there is sentiment. The ISE call/put ratio chimed in at 1.98 and the equity only came in just over 3 at 3.06. Those are the highest readings since the final days of December. I know these days the S&P is only allowed a one-day pullback before notching upward again but the first week of January saw the S&P with a decent short-term pullback.
Staying with sentiment let me note that the Investors Intelligence bulls are still at 57% but the bears are now at 15.4% which is the lowest since July 2024. The bull/bear ratio is now 3.75.
New Ideas
A few days ago I suggested that Meta (META) looked like a good risk/reward here. But (AMZN) is okay too (think we discussed that a week or more ago). My comment about group rotation these last few weeks is evident in these stocks because they have been rotated out of but not into. I suspect I am early on Meta (and AMZN) but I find it interesting that folks are more interested in Palladium than Meta. If I had told you that a few months ago you would have laughed.
We looked at Rio Tinto (RIO) with a positive eye a few weeks ago. It’s moved a bit but look at the weekly chart. It has some resistance here but if you want to play the metals area in a stock that has a giant base, I’d love to see a pullback toward 64 but longer term here’s a base.
Today’s Indicator
The Volume Indicator—I promise I am not making this up—hasn’t budged; it is 51%
Q&A/Reader’s Feedback
I liked Sofi (SOFI) back in June or July, around when it was breaking out. The measured target was around 26-28 so I would say it is having a rest where it ought to. I wouldn’t argue against taking some profits but unless/until it breaks 24-ish it hasn’t done anything wrong yet.
There are so many gaps on the chart of Trade Desk (TTD) that it’s hard to have a coherent view but in the near term a pullback toward that 50-ish level (that holds) seems like it would give the chart a head and shoulders bottom of sorts. One thing I definitely don’t want to see is a plunge under the September low.
You’d think with all these commodities going wild CME Group (CME) would be doing well. My guess is it rallies again but right now I’d say it’s a trading range between 250-285.
The question is if I have a target on Alcoa (AA) which I recommended a few months back. I do not. I think the chart is rather similar to that of XBI which should just gradually eat through resistance. So right now it’s a little over-extended but I expect pullbacks will keep the uptrend going.
On the weekly chart the resistance gets heavy around 45-50 but still appears to be base building.
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