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Weekly Memorandum 2/7/2022

Stocks finished higher last week but formed what appears to be a lower-high with respect to the trend on Wednesday. If this high holds, it would serve to reinforce the existing short-term downtrend in stocks. However, sentiment has turned bearish pretty quickly, which could actually lead to a more choppy market. Stocks could trade in a range-bound manner before eventually falling to a lower-low and completing a bottom, but it's going to take time. We still see tech and growth underperforming, while value and inflation-sensitive sectors of the market show no signs of slowing down.


Interest rates spiked last week (bonds fell), which is a sign that inflationary pressures are showing no signs of decelerating. Crude Oil surged to a new multi-year high and closed at its highest weekly level since September 2014. This strength is a stark contrast to what we're seeing in stocks. The U.S. Dollar continues to trade in a range-bound manner as well, but overall, the trend remains up. The fact that the dollar has rallied for the past 9 months in conjunction with commodities really speaks to the strength in the commodity sector.


Cryptocurrencies rallied higher last week but remain below key resistance as outline in the Mercator Crypto report. Precious metals are trying to solidify a low, but our attention remains fixed on the agricultural sector, especially grains and meats as they continue to exhibit notable relative strength within the broader commodity rally.

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