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Stock Market Lost Momentum
Has Stock Market Started to Ignore “Good” News?
BraVoCycles Newsletter
June 12, 2025
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Today we will be covering...
Today, we will return to our investigation of opportunities in the commodity sector.
We are getting mixed messages regarding the just-completed US-China trade talks.
Long story short, Lutnick and Trump tweeted that the US got a good deal, but later, Bessent tweeted that the negotiations will take a long time, essentially saying that there is no deal yet.
Investors did not buy the “good deal” message, nor presumably the good CPU release.
Invesco DB Commodity Index Tracking Fund (DBC)
My interest in undervalued commodities-related stocks was partly sparked by noticing a 5-year cycle in DBC shown below.
DBC has been consolidating since 2022 and is poised for strength in the next few years.
The weighting of different sectors is shown in the table below. DBC is heavily weighted toward energy.
Sector | Energy | Precious Metals | Agriculture | Base Metals |
Weighting (%) | 55.63 | 12.06 | 20.85 | 11.91 |
Since different sectors do not follow the same cycles, the best approach is to investigate individual sectors and/or stocks within them.
As an illustration, from the charts below, one can see that dominant cycles for crude oil (CL) and gold (GC) are out of phase.
On the other hand, CL and DBC dominant cycles are fairly aligned.
Sentiment & Technical Analysis
The CNN’s Fear & Greed Index is still in Greed, declined from 63 to 62 in one day.
The NYSE McClellan Oscillator ($NYMO) is negatively diverging while SPX hits the upper Bollinger Band boundary.
This suggests that at least a short-term correction may be in the cards.
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Investors used increasing levels of margin debt as the stock market advanced.
Now they started to reduce the margin debt, probably triggered by the sharp correction earlier in the year.
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