Buy Alert! How To Profit On The Breakout In Platinum

by Vlad Karpel

RoboStreet – February 11, 2021 

The Reflation Trade Is Hot And Heavy

There are many ways to describe the notion of the “reflation trade” as it encompasses so many factors as to an economic recovery. In short, I like to think of it as a combination of interest rates ticking higher, commodity prices increasing across most subsectors, stronger employment data emerging, core inflation data moving up and all those epicenter stocks most hit by the pandemic in the travel, lodging, restaurant and live entertainment businesses recovering.

Markets in the U.S. and around the world trade at new all-time highs

There are two very separate forces at work within this reflation scenario. While equity markets in the U.S. and around the world are trading at new all-time highs, much of the Main Street economy mired in recession. Multitudes of small to medium-sized businesses have folded up, as the varied stimulus efforts have been like a cavalry that showed up after the battle was already fought and lost.

Latest Covid data shows a sharp decline in cases

Fortunately, the latest Covid data shows a sharp decline in cases and the vaccine data shows about 10% of the U.S. population inoculated. So, the road to recovery is underway, but there is much more work ahead. Many things about the new normal economy are permanent changes – especially the number of people that will work remotely on their jobs indefinitely. If there is one expense getting slashed at the corporate level, it’s office space.

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SPY run into some headwinds on rallies

Let’s review the market’s technical landscape and see what our indicators are telling us. The SPY is running into some headwinds on rallies, but also seeing buyers show up on any decent dips. Short-term range remains between $370 and $395. The DXY started its correction and trading to the downside. TLT remains in the downward momentum as yield curve steepens.

The question on everyone’s mind is still: Is this the beginning of the next leg up in the market or is this a short term bounce followed by another retest of the recent lows (ABC pattern). At this point I would not chase the market due to the risk vs the reward.

The key support is now at $364-$370 and I expect the SPY to retest these levels in the next 1-2 weeks. The $388 level is key support for the SPY short term. The bottoming process has started and the worse part of the sell off is now behind us.  Market will finish the bottoming process by end of February and will resume bullish momentum as we approach end of February/ early March.

 

I would be a buyer using any short-term corrections, and use dollar cost averaging strategy to accumulate positions. Based on our models, the market (SPY) will trade in the range between $364 and $385 for the next 4 weeks.

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A couple things stand out this past week that I want to highlight. One is how the materials sector has been firming up, certainly with copper hitting multi-year highs, but also with other strategic metals and steel prices. When we look at the materials sector of the market, we get a quintessential set up for investors to take advantage of.

XME look coiled to trade to new highs for the current cycle

Shares of the SPDR S&P Miners & Metals ETF (XME) shot higher to a two-year high of $38 back in early January and have since consolidated along the 50-day m.a. rallied back above the 20-day m.a. and now look coiled to trade to new highs for the current cycle. I’m looking to add XME to our RoboInvestor Portfolio per my AI indicators, and this is one trade you don’t want to miss out on.

Bullish price action in XME

My AI-driven platform features a tool called the Seasonal Chart, which is a data-crunching model that provides directional probability readings for the next six weeks. As one can see from the table below, we’re looking for bullish price action in XME.

Anytime we get four “Higher” probability readings, we turn our attention to pinpointing the optimal entry point for our RoboInvestor subscribers. It’s this kind of work that our AI platform delivers that has produced unrivaled performance of a 91.00% Winning Trades Percentage going back to April 2018. That means we’re not just working hard, but we’re also working smart…very smart.

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PLTM gap higher this past week out of a constructive handle formation

As would be with any sector, there are almost always standout trades that offering compelling risk/reward propositions. One of them that has emerged is that of getting long platinum. Talk about an explosive chart! Shares of Graniteshares Platinum Shares ETF (PLTM) gapped higher this past week out of a constructive handle formation as traders and investors poured into this specialty metal that has wide industrial use, primarily in the auto industry.

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Shares of PLTM vaulted to $12.31

Shares of PLTM vaulted to $12.31 and should provide for a dip that RoboInvestor members will be able to take advantage of. We want to be buyers on the first opportunity we get when such a powerful breakout occurs. Platinum might just be the ultimate reflation trade!

Applying our proprietary Seasonal Chart again, we get a more varied readout where short-term bullish momentum will give way to some back and filling and then rally further out. Here too, we want to time this price action just right, which is why AI data is crucial.

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The RoboInvestor advisory service is based on an unrestricted asset selection process. We can trade in blue-chip equities and ETFs where the underlying assets are currencies, commodities, interest rates, volatility and bearish situations. It’s wherever the best risk/reward ratios lie that our AI system brings to our attention.

Winning trades in over 9 out of every 10 times our members put capital at risk

As a subscriber to RoboInvestor, we provide a newsletter every other week with two new trades over the weekend so you can take action on Monday. Our typical trade is to take a full position when we buy and sell 50% on the way up and another 50% when the position is flashing an extreme overbought condition. It’s a fantastic winning formula that produces winning trades in over 9 out of every 10 times our members put capital at risk.

Join our RoboInvestor community today

Following such a strong start to 2021, don’t be left wondering how to navigate the investing landscape going forward on your own. Put the power of market-proven AI to work for your portfolio and join our RoboInvestor community today. Together, we’ll build and create real wealth on a steady basis and let the power of compounding do the rest. I personally look forward to welcoming you aboard.

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