Investor Agenda

Bullish Call on Palladium

Kotick Tick By Tick

It's time check in with the chart wiz, Jordan Kotick, Global Head of Technical Strategy at Barclays Capital. Kotick remains bullish on palladium!

Q Equities are still going higher. Are they too extended?

A - In the short term, when you rally as you have from the February low, between 10-15% without a correction, the growing risk is always that a pullback and profit taking is near. However, the overall upside trajectory remains in place. Markets around the world are pushing to all time new highs, not just new highs off the cycle low from 2008 or 2009. Argentina’s Merval Index, Mexico’s Bolsa Index for example are standouts. Other markets like the Tel Aviv 25, the Bovespa are within 5% of an all time high. So the global backdrop, what we call International Breadth, is still supportive beyond the short strokes

Q - Emerging markets seem to be leading the way?

A - Indeed and the early signals there are often found by watching their currencies. For example, it was an aggressive show of strength in Singapore Dollar last night as US Dollar/ Singapore Dollar fell strongly. US Dollar/South Korean Won continues to fall, US Dollar /Thai Baht is still heading lower. Emerging Markets currency appreciation tends to go hand in hand with risk appetite and the risk seeking behavior that drives equities higher.

Q - A few quarters ago, you were very bullish Palladium. It has exploded higher. Are you still bullish and does it matter for stocks?

A - Yes and yes. We are always concerned about super spikes that often form in commodities. Especially in the less liquid ones like Palladium. This market is one of those markets that has one foot in the precious metals camp, one foot in the base metals camp since it has economic uses. So that the leaders, like Palladium, continue to lead is a sign of market consistency overall. This is bullish for risk. That it has some economic implications is also a good sign. So while bullish, we are becoming more guarded as the market risks embarking on a trajectory that is going too far, too fast. We have to keep an eye on this one in Q2.

Watch Jordan Kotick at 3:15PM ET on Closing Bell. He will explain the charts.



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