A similar pattern occurs almost everyday in the market : a strong opening followed by a quiet trading’s session and finally a strong close in terms of prices which is confirmed by the closing tick. This reflects a liquidity driven market where huge money flow enters the market at two critical points of the day: the opening and the closing of the market. These days, this money is mostly directed towards instruments reflecting the indexes: ETF and equity funds with a small part allocated to specific situation following corporate news or earnings results. A good example is Apple whose stock price jumped more than 50% since last August but without much earnings upgrades from analysts. Finally, it is only a P/E multiple expansion that drives the prices, reflecting renewed confidence from investors and the reflation process from central banks; earnings confirmation may or may not be confirmed later. The stock market is playing its role of being a leading indicator for the whole economy, forcing recently underinvested market participants to step in at any price. This has led our model to the upper boundaries of risk in this period where stocks are in short supply after years of buyback programms and delistings.

The reflation process that is ongoing since January 2019 has revived the case for precious metals after a long period of a correction/consolidation that followed the previous cycle that started in 2003 and peaked in 2011. Palladium, gold and platinum have been the main beneficiaries among the precious metals family and silver has barely moved although the first signs of revivals have emerged. We believe that the first two impulsive moves have been already traced and prices should accelerate over the next few months with an objective at usd 27 that may be already reached this year. Silver is a precious metal that is not so rare but like many commodities ist price is mainly driven by supply and demand until speculation steps into this peculiar market. Patterns tend to be similar from one cycle to the other with explosive prices at the end of the cycle. We already observed this behaviour in the two upwaves that developped since last year. We’ll follow on a regular basis the developpment of the silver’s cycle and we’ll keep our readers abreast of the latest developpments. An entry point at usd 18 may be interesting for an objective, previously mentionned, at around usd 27. See charts attached