Top And Worst Asset Performers For The Week Of 9/13/20
Intermarket analysis is a powerful tool that gives traders/investors a macro predictive direction of stocks, bonds, commodities and currencies. Intermarket analysis states that all asset classes are interrelated and that you can’t definitively determine the direction of one asset class without examining the other asset classes.
There are several key relationships that bind these four markets together. These relationships include:
The INVERSE relationship between commodities and bonds.
The INVERSE relationship between bonds and stocks.
The POSITIVE relationship between stocks and commodities.
The INVERSE relationship between the US Dollar and commodities.
The overall goal of the intermarket analysis is to identify top performers or the markets that are outperforming others. With all that said, the top and worst performers from this past week are the following:
Top Performers
Gasoline RBOB: +12.94%
Crude Oil WTI : +10.13%
Mid-week, oil surged 3% as Hurricane Sally made its presence known along the U.S. Gulf Coast, putting both offshore oil production and refineries onshore on notice. Thursday it was clean up time and startup time as oil production operations were idle for five days. While Hurricane Sally plowed through the Gulf States, it shut down over 500, 000 barrels per day of oil production, representing more than a quarter of U.S. Gulf of Mexico output.
Crude Oil Brent: +8.34%
Worst Performers
Lumber: -9.65%
According to the National Association of Home Builders, lumber used for framing homes account for roughly 20% of the materials cost of building a home. Right now those homebuilders have leverage and just passing on the cost to the buyers like me and you. However, that’s not deterring buyers away from buying homes as space is the best defense to play against COVID-19.
Natural Gas: -9.74%
Natural gas futures are trading mixed on Friday after plunging the previous session after the government reported a huge storage build. The news raised concerns over a potentially bearish imbalance while escalating worries about looming storage surpluses as the summer cooling season comes to an end.
This week’s bearish price action suggests the recent rally was overly speculated and not supported by the current supply/demand situation. Brimming storage levels in September are more indicative of lower prices, something the markets haven’t reflected all month until this week.
Coffee: -14.31%
The glut of coffee beans around the world is sending coffee prices to the worst weekly slump since 1998. Warehouses in Brazil, the world’s biggest grower and exporter are full to the rim to the point trucks are waiting days to unload cargo. Blame COVID-19 as people around the world are reluctant to go to cafes and restaurants which has dampened demand.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advice. Do your own research before making investment decisions.
Posted Using LeoFinance
