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A breakdown in Basic materials often does not suggest economic strength is around the corner. Forgetting the macro picture for a minute, the breakdown in IYM increases the odds SMN might do rather well for those open to scoring on defense! Why? See below…
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IYM fell almost 50% more than the 500 index did back in great unwind back in 2008. Always remember, solutions are available, regardless of the macro direction of the economy!!!
Belsha…ideal to buy SMN right now? As you share early March was the best, looking back..actually you hit the date I first mentioned “DEFLATION” on a break of key products, such as IYM. I am not into labels, yet what the patterns were suggesting back then prompted me to go out and use this label that so many find challenging to discuss.
See link below..
https://www.kimblechartingsolutions.com/2011/03/deflationtrend-reversal-update/
But is this really the moment to go short via SMN? Look at early march 2008, IYM broke the 200MM and then immediately rallied up to a new high in June. The perfect time to go short would have been July-August, on those “kiss of death” downside failed test of the 200.