Macro Extremes (week ending May 7, 2021)

The following assets (on a weekly timeframe) registered an Overbought reading or traded more than 2.5 standard deviations above its rolling mean.

Extremes “above” the Mean (at least 2.5 standard deviations)

Coffee (2nd consecutive week)

Italian Government 10 Year Bond Yields (2nd consecutive week)

Zinc



Overbought (RSI > 70)

French & Korean Government 10 year bond yields

The Commodities Indices (the CRB and Bloomberg’s)

Aluminium (for 11 consecutive weeks)

Tin

Lean Hogs (for the 12th consecutive week and its highest price since July 2014)

Heating Oil

S&P 500 Index (for the 5th consecutive week)

Dow Jones Industrial Average (for the 5th consecutive week)

S&P Mid Cap 400 (9th consecutive week)

U.S. KBW Banking Index (10th consecutive week)

Nasdaq Transportation Index  (8th consecutive week)

Dow Jones Transport Index (9th consecutive week)

Sweden’s OMX 30 Equity Index (10th consecutive week)

France’s CAC-40 Equity Index (for the 4th consecutive week)



The Overbought Quinella – Both Overbought and Traded at > 2.5 standard deviations above the weekly mean)

Copper (now in its 21st consecutive week of being Overbought, has also moved to a standard deviation extreme)

Iron Ore (in its 4th week being Overbought, it too has registered the Quinella)

Corn (overbought for the 22nd consecutive week & trading 84% above its 200 Week Moving Average)

Soybeans (overbought for 9 consecutive weeks & 73%> its 200 Week Moving Average)

Lumber (having risen 55% in past 6 weeks)

Wheat (2nd consecutive week)

Cryptocurrencies – EOS, Ethereum, Litecoin, Dogecoin & Ripple (XRP)

Assets (securities) within my immediate universe which touched the other side of the extreme, being Oversold (where the RSI is < 30) or were at least 2.5 standard deviations below its mean are;

Extremes “below” the Mean (at least 2.5 standard deviations)

Cocoa

Oversold (RSI < 30)

Nil

The Oversold Quinella – Both Oversold and Traded at < 2.5 standard deviations above the weekly mean)

USD/CAD (meaning sell your strong Canadian Dollars against the weaker U.S. Dollar)

The rising CAD is also coinciding with the rise in commodities prices.

Notes & Ideas:

After 11 consecutive weeks, the Canadian 10 year bond yields have pulled back from their extreme highs,

and so have the German, French and U.S. bond yields.

The ‘softs’ continue their parabolic rise. Such moves aren’t sustainable.

Fun Fact: The ASX 200 is the same price as 3 weeks ago when it touched a 2.5 standard deviation high.

And I’m watching for these which are nearly entering Overbought territory;

Spain’s IBEX 30, Gasoil, AUD/JPY & AUD/USD.

May 8, 2021

by Rob Zdravevski

rob@karriasset.com.au