The Great Sale of the Century
Above is the chart of S&P 500 relative to the Commodity Market Index PPI (Producer Price Index). When the ratio rises, stocks beat commodity returns and when it falls, commodities beat stock returns. The current gap between S&P 500 vs the price of commodities (red circle) is the WIDEST it has been for as long as they have been tracked since the Civil War.
Conversely, this is the chart of S&P GSCI Index divided by the S&P 500. The S&P GSCI Index is the first major investable commodity index and it is one of the most widely recognized benchmarks that is broad-based and production weighted to represent the global commodity market beta. The index is designed to be investable by including the most liquid commodity futures, and provides diversification with low correlations to other asset classes.
The S&P GSCI Index divided by the S&P 500 chart shows periods in the past when commodities experienced highs and lows compared to the S&P 500. Recently, commodities are on their best sale EVER than at any time in the past, including when investors were chasing the Tech Bubble in 2000. Notice the blue circle at the far right. It is indicating that this ratio of commodities divided by the S&P 500 just started to REVERSE.
Based on Cycle Analysis, we are in the Commodity Bull Run, which is expected to stretch into 2024. The COVID-19 plandemic has resulted in bottleneck in the supply distribution channels, adverse climatic conditions and expanding human activities are causing more crops to fail, energy demand is soaring even as supplies remain tight as the International Energy Agency (IEA) expects global energy demand to rise 4.6% this year, surpassing pre-COVID-19 levels. All in all, commodities have every reason to keep going higher and should outperform the S&P 500 going forward.
Hess Corporation (HES) is a U.S. global independent energy company involved in the exploration and production of crude oil and natural gas. I recently rang the cash register when I exited my HES trade at US$91 (red circle) with a handsome 12.7% profits in 7 trading days after first entering it at US$80.73 (blue circle). Me and my Timing And You members are also sitting on other open gains of 5.14% and 2.4%, and we only got into these positions in the past couple of days.
For more information to participate in the Great Commodity Sale of the Century, click here.
Commodity Bull Market into 2024! Timing is Everything! 时机就是一切!
** Please note that what is being shared in this article is NOT meant to be regarded as an advice or a recommendation, it is meant for EDUCATIONAL AND INFORMATION PURPOSES only and it does not constitute an investment advice, an offer or solicitation to purchase or sell the investment asset classes mentioned. **