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:

When Junk Bond traders jump ship, I’m out of stocks.

With all the talk about credit spreads “blowing out” since early August, this is an important discussion to have right now.

We always trust the bond market. Throughout history, bonds have done an impeccable job at alerting investors about problems in risk asset markets. 

When there is stress in other markets, it shows up in fixed income first.

However, as technical analysts, we are mindful of the math that is behind some of the relationships we study and give weight to.

What if I told you that industrials have been massive underperformers during this bull market? 

The absolute price chart looks incredible. How could that be?

We call it the denominator fallacy. 

Benchmarked against the S&P 500 or Nasdaq 100, of course they are underperforming. 

We think there is a similar situation playing out for our bond market ratios right now.

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.