“The most effective and functional trading belief that he can acquire is “anything can happen.” Aside from the fact that it is the truth, it will act as a solid foundation for building every other belief and attitude that he needs to be a successful trader.” ~ Mark Douglas

Good morning!

In this week’s Dirty Dozen [CHART PACK] we look at Europe with a 21-year breakout, airlines in a bull trend, buy signals in tech, consolidated positioning nearing a zenith, soybeans at an inflection, the peso (MXN) going into elections, and monthly stock charts with great setups, plus more…

Let’s dive in.

***click charts to enlarge***

1. Ari Wald, a seasoned technical analyst at Oppenheimer, shared some great charts on Bloomberg this past week. Here’s the SPX on top and RTY below. Both are coiled tight and ready for a run higher.

2. Europe’s stock market just broke out of a 21-year sideways consolidation.

3. This final one from Ari shows Airline stocks stair-stepping higher. We’ll see how long this trend will last if oil breaks out higher (which I expect it will).

4. @MacroCharts tweeted about the recent underlying strength in growth stocks, writing “Important strength in Growth Stocks: One-third of Nasdaq Stocks have triggered Buy signals – the most since March 2020. Most spikes of this magnitude led to bottoms or *big* rally extensions. A textbook Bull Market response after a sentiment capitulation – follow the Trend.”

5. I’m bullish over the very short-term but believe we’re nearer the end than the middle of this leg of the bull rally. One more leg up should be enough to get players over their skis…

6. USDJPY is trading in one of its tightest two-month ranges in 50-years. Compression regimes lead to expansionary ones (big trends).

7. A few weeks ago we talked about the near-record high aggregate speculative positioning in Ags. A number of these charts are starting to pull back from extended levels. Soybeans recently crossed above 2.5 on its weekly SQN. There have been 5 instances over the prior 60+ years and 4 of them led to lower prices a few months later.

8. China’s been seeing a pickup in flows and these inflows are leading to a rise in MACD buy signals within the SHCOMP. The chart is bullish and the long-term trend is up.

9. The Mexican peso is coiled and setting the stage for a break higher. Barclays notes that the peso has been trading weak into the coming election, which is typical, but a relief rally should follow after the vote.

10. I’ve shared this one before but figured it’s time for an update since it’s starting to run.

Trilogy Metals (TMQ) is a mining company with a large interest in copper, zinc, lead, and gold/silver projects in Alaska. The stock is breaking out of a 7-year cup-n-handle (chart below is monthly). Seth Klarman’s Baupost Group is one of its largest investors.

11. Babcock & Wilcox Enterprises (BW) is a company focused on renewable energy solutions with a great monthly chart and lots of insider buying over the last year. I’ll be digging into this one over the coming week.

12. GSM produces advanced metallurgical products. The stock has been on a tear over the last 6-months and looks to be gearing up for another run. We haven’t yet done DD on the company but it’s on our short-list to dig into.

Stay safe out there and keep your head on a swivel.