The Ties That Bind Commodities And Stocks

By Jesse Barkasy

The stock market seemed to change its personality in May.

I attempted to ride a breakout to the upside in Yelp (YELP). I bought a large position and then China numbers brought down the market and it brought YELP’s stock along with it, handing me a loss. I will attempt to cut the losses quickly if I am able. YELP is still very interesting to me here as it remains on a medium term uptrend.

Since the day of the China numbers announcement I have become more cautious and attentive to the large whips in the market.

Brazil and Mexican stocks I follow have been losing ground for a while now and there is just a little bit of lift in some Chinese stocks.

I will here focus on the recent fall in commodities. If they fall gently and find a bottom soon, this can be good for the markets; if they crash, this indicates serious economic conditions worldwide. I expect major trends in many stocks to come because of the moves in commodities and so I am waiting for trend changes to ride.

Gold continues to drop and the gold bugs keep defending the case to buy. Personally, I just see the trend as down. There can be thousands of reasons we do not know about that are causing gold’s price to fall.

Who is to say, for example, that platinum or another metal can’t become the new favored jewelry, bringing the price of gold down for a decade? I will leave the predictions to the fortune tellers.

I apologize for the late report and I feel it is better to give a clear report than to rush it when things are a bit cloudy, as they were at the end of May and beginning of June. Right now the U.S. stock market appears to be resting after a long term breakout for many large cap stocks.

The investments discussed are held in client accounts as of May 31, 2013. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable.

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Jesse Barkasy

Jesse Barkasy

I have worked as a professional trader for 13 years. I use charts and sentiment measures to guide my trading

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