It has been two-years since the S&P 500 bottomed in October 2022 and stocks began a new bull market. 

During this time, many sectors and industry groups have enjoyed tremendous uptrends while materials stocks have gone sideways.

But materials stocks are starting to look interesting...

The SPDR Materials Sector ETF $XLB is making new all-time highs:

A couple of weeks ago, we talked about Silver futures attempting to emerge from a multi-year accumulation pattern and potentially retesting the former all-time high.

Last week,  Silver made a new multi-decade high in absolute terms and broke a multi-year downtrend line relative to Gold. 

And if the 47th element is about to blast off, we should look closer at the Junior Silver Miners.

But first, check out this chart of the Silver/Gold ratio:

Last week, we discussed China and Gold futures as potential catalysts for resolving a multi-decade basing pattern in Dr. Copper.

If we're in an environment where Copper futures are printing fresh all-time highs, then we should spend some time identifying opportunities in the equities market that benefit from rising base and industrial metal prices globally.

Over the last 6-months, the Steel $SLX, Copper $COPX, and Metals and Mining $XME ETFs have underperformed the S&P 500:

Despite the recent volatility, gold continues its steady ascent, unaffected by the broader market noise. 

As seasonals have shifted and new leadership has come and gone this year, gold remains resilient, moving through market regimes with ease.

Whether stocks rally or risk-off sentiment prevails, gold thrives. The yellow metal has been red-hot all year.

In these times, the saying goes, "there is no fever like gold fever." 

But, is there any evidence of this kind of euphoria among investors yet?

While the COT report suggests sentiment may be overstretched, let’s talk about what we’re seeing on the ground.

There’s little buzz about gold in the financial media. No bold predictions of $10K gold on magazine covers, no headlines touting it as the ultimate safe haven in an impending crisis—signals that often show up at market tops. We’re just not seeing it.

For context, in 2011, fears of currency depreciation were rampant. The covers of TIME magazine and Smart Money allow us to remember this moment. They came right at the top.

Large Speculators haven't owned this much Gold since 2020. We have the data.

In precious metal bull markets, it's perfectly normal for Commercial Hedgers to offset their physical positions by shorting the underlying futures contracts.

We also tend to see the Speculators build massive net-long positions.

Check out the extreme Commercial Hedger net-short position in Gold and Silver futures:

Have you heard about China?

Chinese stocks just had their best week in history, following the People's Bank of China's (PBOC) announcement of rate cuts, among other stimulative actions.

In July, we talked about Copper and its base and industrial metal peers showing broad weakness. But that seems to be changing...

China is the world's largest consumer of refined copper, so base and industrial metals have benefited from the recent pivot from the PBOC.

Chinese stocks and copper futures have been positively correlated for years:

Gold futures have been relentlessly rising and printing new all-time highs. The precious metal is now overbought on a 14-day, week, and month RSI. 

We've recently seen Palladium rip over 20% in a few days and momentum thrusts for the Junior Gold & Silver Miners ETFs.

With this new Gold bull market now almost 7 months old, maybe it's time for Silver futures to break out of their multi-year range.

Let's talk about it:

It has been over 1,600 days since Crude Oil futures traded below zero in 2020, which preceded one of its best 2-year bull markets in history.

Since the peak in early 2022, energy has been a tough trade for those with trend-following strategies and a favorable one for mean-reversion strategies.

Crude Oil futures are at the lower bound of a multi-year range, and the Energy Sector SPDR $XLE has the fewest percent of stocks above their 200-day moving average out of all 11 sectors. 

Energy has been a laggard recently.

However, it's important to remember where energy has come from. Crude Oil futures went from below 0 to 130 in less than two years, and the XLE is the second best-performing sector since Covid, lagging only Technology $XLK:

Last week, Palladium surged nearly 20% after we discussed buying the futures, and Gold reached a new all-time high.

In response, precious metals mining stocks ripped higher for their best week since 2020.

The momentum behind some of these moves is absurd. For example, CDE, GATO, AG, and NGD all rallied over 30% last week.

Let's talk about what we're doing about it:

We've been obnoxiously talking about soft commodities lately.

But, it's for a good reason! And it all comes down to relative strength.

Aside from a few pockets of strength, the trends have been a mess in the broader commodity complex.

Products like Natural gas and precious metals have been hard to ignore if you're involved in the commodities markets.

There's more though. 

Orange Juice futures made a new all-time high this week and look primed to begin a new leg higher.

Let's talk about how we're playing it:

First, some context: 

Last month, we discussed the Palladium ETF $PALL hitting fresh 7-year lows, breaching a critical support level.

However, the bears could not gain any downside momentum, and it seems like we're nearing a cyclical trough.

Commercial hedgers have never carried a larger net-long position. Historically, it has been prudent to not bet against the smart money in commodities markets.

And one of our favorite long-term momentum indicators, the monthly MACD, has now given us a buy signal. That said, it's still a bit messy in the short term.

Let's talk about it.

With fall approaching us, things are beginning to change.

The weather is perfect for golfing, the Kansas City Chiefs are back to dominating the NFL, and it's the best time of the year for Natural Gas futures.

In July, we outlined asymmetric risk/reward setups in Natural Gas futures and 4 natural gas stocks.

As we expected, it has taken some time for these setups to come to fruition. 

However, the cleanest fossil fuel has carved out a textbook reversal pattern and looks poised to blast off any day now.

Here's the average monthly performance for Natural Gas futures over the past 3 decades: