Investors sell commodity stocks as Oil makes a double top on charts
This weeks update is jointly written with our Hui Si Tan (Senior Data Analyst).
In our previous release, we saw that investors have been buying Fixed Income. This week, we are still seeing the trend continue. With the recent update that the FED will be slowing their pace of the interest rate hike, and with longer term interest rates at cyclical highs, maybe the investors’ optimism is justified. Time will tell.
Equities remain sluggish
Overall, while the selling pressure seems to be decreasing, the sentiment in Equities is still to sell. Investors’ optimism seems to still be in Fixed Income. See chart below
However an interesting pattern emerges if we look at the industry sectors inside the buy/sell of equities. We are seeing commodity stocks being sold
This selling of commodity stocks suddenly makes sense if you look at the Crude Oil chart (first image on top of this weeks newsletter), which shows a classic ‘Double Top’. Crude Oil chart has reached a high price two consecutive times and seems to be breaking the support line soon.
Technical charts are usually a hit or a miss (and this newsletter is not in the business of forecasting future prices), but as of the moment the chart and the investor behaviour are consistent. Whether this is the right strategy or not is something we will find out over the coming weeks.
Semiconductor Stocks being bought
Even though the net activity for equities has illustrated a selling trend in commodity stocks, Investors are still actively purchasing Technology equities, mainly the Semiconductors stocks.
Aside from Semiconductors, with the recent news of Tesla’s Q2 earnings report, we saw Investors purchasing Tesla’s stock, signifying their continued confidence in Tesla.
Eyes are now on the next earning reports by the 5 big technology companies (Apple, Microsoft, Amazon, Alphabet, and Meta). Will we be able to see these tech giants perform as well as Tesla?
Tl;dr
- Investors still purchasing Fixed Income
- Equities’ activity nets to a sale especially in commodities but investors are still actively purchasing Technology stocks
