Nick Hodge,
Publisher
July 27, 2021
I’ve been telling premium members about a new market cycle that’s beginning.
In these free pages, you’ve heard me talk a lot about the indicators I’m watching to foresee when this bull market in stocks is going to end, or what could turn it on its side.
And I’ve also talked about what would allow gold to enter a new phase of its secular bull market. For almost a year now, interest rates have had a thumb on the scale of gold prices.
I’ve been calling out these main market forces for you in real time in editorials like these and in the weekly market update videos I put out.
What’s happened over the past few weeks is that bond yields started to break down. And that’s a major indicator that things are starting to turn.
So we have to start looking at what's coming next.
For a while — for the past seven or eight months — sectors have led like financials and energy, and I've talked about that. Premium readers have profited from energy stocks on multiple fronts as they’ve the stock market higher over that time.
Today, you can see higher energy prices at the pump. Oil went from negative in 2020 to $70 per barrel in a hurry.
And that's not only been reflected at the pump, but in related energy equities.
As a sector of the S&P, you can buy energy in a fund called the SPDR Energy Select (NYSE: XLE). Or you can buy individual oil and gas drillers. Or pick your flavor of energy. This is one that’s been working for us.
We've also been having these monthly “sell offs”, which I’ve also highlighted to members.
And every month I’ve said: "It's not it yet. It's not it yet. Rates are still going up. Volatility is still trending down."
Then, last week, you had a relatively larger sell off with volatility spiking higher than it did in the past two months, coinciding with rates breaking down.
That gets people talking about a turning or a rotation of the cycle.
It doesn’t mean stocks can’t go back to new highs. Indeed, they are close to highs now.
But what's changing is that different sectors are leading now.
So if you pull up a table of the sectors that are doing well and look at the past week or past month versus the past six or seven months... You'll see that other sectors are doing well now that are more defensive, like real estate and utilities.
That's one part of it: getting a bit more defensive.
Now this isn’t Chicken Little. This is investing.
It's not like the sky is falling because bond yields broke support.
What it does mean is that new sectors are leading the market. A new profit cycle is at hand.
The other part of it is gold.
Bond yields going up have kept gold prices down for nearly a year now.
Now that yields are breaking down, gold can go up. And it's consolidating very nicely here in $1,800 per ounce range, gaining energy to do so.
So I have premium members starting to rotate into real estate… and back into the quality precious metals names.
Here is one way we’re doing that.
Call it like you see it,
Nick Hodge
Editor, Daily Profit Cycle
Nick Hodge is the co-owner and publisher of Daily Profit Cycle and Resource Stock Digest. He's also the founder of Hodge Family Office, the umbrella organization for his three premium services: Foundational Profits, Family Office Advantage, and Hodge Family Office . He specializes in private placements and speculations in early stage ventures, and has raised tens of millions of dollars of investment capital for resource, energy, cannabis, and medical technology companies. Co-author of two best-selling investment books, including Energy Investing for Dummies, his insights have been shared on news programs and in magazines and newspapers around the world.
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