These areas have largely lagged the melt-up that began in June of last year, and I suspect this breakdown is a sign of capitulation. I very much think these areas are worth paying attention to in the weeks ahead given they they could outperform during a risk-off period.
Interestingly, very long duration bonds (EDV) also have done poorly, likely to rally on an oversold comeback. If the fear trades of gold and bonds are extreme on the downside, it seems entirely plausible for them to rally in a major way.
The bottom line? Energy continues its ascent and may be getting on the extreme side, while the metals and mining trade, with most notably gold and silver, combined with Treasuries, acting in a capitulation-type fashion just as a correction in risk assets may be about to begin. For those looking to be contrarian, a sharp bounce in the extreme losers this week may be in the cards.
At the time of publication, the author held no positions in any of the stocks mentioned.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV