Last week we held our May research call featuring Katie Stockton, the co-founder of Fairlead Strategies, who provided specific capital markets and digital currency commentary. Katie is a regular speaker on CAPIS monthly research calls and is a renowned media participant.
There has been “lots of action,” but prices and risk bear scrutiny. Stockton said there was a lack of commitment to chase the market higher when valuations are getting uncomfortable to people. Her technical analysis of the U.S. equities universe showed:
- The market remains in an uptrend, but that would be in jeopardy should the S&P cross its 50-day moving average.
- Momentum has deteriorated, but long-term momentum is positive behind major indices.
- Steep uptrends often need to take a pause to refresh themselves, and that’s what investors are now facing.
- Large-cap tech stocks show overbought downturns, and the expectation is for more price pullbacks and some choppiness.
- Small-caps have lost momentum and relative strength.
- This year should be more about value than growth on a relative basis.
- Commodities’ outstanding upside momentum points to further rising prices Of note are lumber, copper, and corn. Keep an eye on commodities that are staples of the housing market which remains gangbusters.
- Crude oil prices are on the rise with summer seasonality, and serve as a nice catalyst for energy stocks to extend their current outperformance. She targets long-term oil prices at $77 per barrel.
- Technical analysis continues to show support for crypto prices, however, Bitcoin has lost significant upward momentum. To Stockton, technical analysis is a great means of evaluating cryptocurrency price action.