Disclosure: The following represents my opinions only. I am long AAV, AOI, ARX, BTE, CDR, CJ, CRE, CVE, DML, FWZ, GMIN, NICU, NSE, NXE, STGO, TAO, TNZ, TOU, U.UN, UEC, VLE, and WDO.
People talk about the summer doldrums; a time when most money managers are on vacation or thinking about vacation. Phones on trading desks ring less, fewer people respond to emails and texts promptly, if at all, and stocks tend to trade on lighter volumes. Some years the doldrums analogy rings true in terms of listless stock performance, but not this summer; this summer it seems like there’s a bit of market magic in the air. Optimism is a powerful thing, and with inflation cooling, the market is hopeful that the Fed is more of less at the end of its hiking cycle. As a result, tech/growth stocks have recovered much of their prior mojo, though the market does seem to be more conscious now of how companies are actually performing financially before taking them higher (or pounding them lower). Meanwhile, oil has a pulse and the energy sector is a top performer over the last month or so. WTI is back above $80/barrel and the Canadian energy stocks that I follow had a very good July. The energy sector as a whole looks cheap and with OPEC+ keeping the pressure on in terms of managing supply, it’ll be interesting to see how the balance of the year plays out as global demand continues its unrelenting march higher. Copper stocks seem to be hanging in better than the metal itself and I’ll happily add exposure if/when I see copper through $4, but for now I’m in no rush to add any copper (I’ve got my list ready though). China’s economy remains a wildcard, but at this point I feel like China is more likely to positively surprise than negatively surprise, simply because expectations are already so low, but we’ll see. After a big battery-metals rush, the interest in lithium and nickel has waned, so those stocks are generally drifty; but the renewed interest in uranium shows that resource investors are still responsive to good themes. Gold and silver have been moody and I’ll take my cues from the gold price chart. If gold can hold above $1900, the sector looks pretty cheap, but for now, few people care about anything but the best stories, so it’s survival of the fittest out there.