Research Summary
The report discusses the current bullish trend in the market, highlighting some positive developments and potential risks. It also covers a bullish signal in healthcare, a long setup in USDCNH, and a Mexican housing play. The report emphasizes the importance of trading the trend, not the warning signs, and notes some red flags for the intermediate-term trend.
Key Takeaways
Market Trend and Warning Signs
- Trading the Trend: Despite some growing warning signs, the report advises to trade the trend, which is currently bullish. It notes that market internals showed some improvements last week, suggesting a positive outlook.
- Warning Signs: The report mentions the Hindenburg Omen and Titanic Syndrome as technical warning signs. These indicators have triggered a combined eight signals in the past three weeks, the most since December 2021, suggesting a potential risk in the index.
Healthcare Sector and USDCNH
- Bullish Signal in Healthcare: The healthcare sector is making a new all-time high after over a year. Historically, the sector has been positive a year later 80% of the time with a median return of +20%.
- Long Setup in USDCNH: The report suggests a potential long setup in USDCNH on a break above recent highs. It notes that China has kept the RMB artificially propped up, and there are good odds that the Chinese will raise the implied ceiling on USDCNH, which would be deflationary for the rest of the world.
Mexican Housing Play and Tin Miner
- Mexican Housing Play: The report is bullish on Mexico over the next 3-5 years, particularly on homebuilder stocks. It highlights Corpovael (CADUA) as a potential play, noting that the stock just broke out of its three-year base and is trading at its cheapest valuation in its 10-year history.
- Tin Miner: The report mentions Alphamin (AFM:TSX) and Metals X Limited (MLX:ASX) as potential plays in the tin market, noting that both are on the brink of breaking out from a major compression regime.
Actionable Insights
- Monitor Market Trends: Despite warning signs, the current market trend is bullish. Investors should keep an eye on market internals and technical indicators to gauge the sustainability of this trend.
- Consider Healthcare Sector: With the healthcare sector making a new all-time high, it may be worth researching investment opportunities in this sector, given its historical performance.
- Assess USDCNH: Given the potential long setup in USDCNH and the possibility of China raising the implied ceiling on USDCNH, investors should consider the implications of these developments on their portfolios.
- Research Mexican Housing Stocks: With a bullish outlook on Mexico, particularly on homebuilder stocks, investors should consider researching companies like Corpovael (CADUA).
- Explore Tin Market: Given the bullish technicals in tin miner Alphamin (AFM:TSX) and Metals X Limited (MLX:ASX), investors should explore the potential of the tin market.
