This battered commodity is about to soar
When the whole crowd is making the same bet, it makes sense to do the opposite.
This is the simplest description of investing against the grain. It works because once everyone believes in an outcome, there is no one left to keep pushing prices in that direction.
Today we see that happening in a certain product. The decline started earlier this year. And it has only gotten worse in recent months.
Now the setup is the craziest we’ve seen in almost two decades. And that means that this battered raw material is about to increase dramatically.
Let me explain …
Bearish palladium bets hit crazy levels in May 2020 …
People were the most bearish they had been on the metal in over a decade. As I explained in Daily Wealth, record bearish bets often mark a turning point in a trend … and a rally in the metal was likely.
Palladium took off after this initial signal … for a gain of 56% in one year. And now the metal is ready to start over.
Investors are betting against palladium again at insane levels. We can see this through the Commitment of Traders (“COT”) report for the metal.
The COT Report is a weekly survey that shows us what futures traders are doing with their money. This tool does not give us a lot of information in normal times. But when futures traders are betting at extremes, this is a great contrarian indicator.
This is because collectively these traders are terrible market timers. If they are all betting in one direction, the reverse is likely to happen.
Today, bearish bets on palladium are the highest since 2002. Take a look …
You can see bearish palladium bets hit an almost two-decade low at the end of last month. Futures traders have abandoned the metal in record numbers.
We have seen similar setups over the years, the most recent in 2020. And each time has led to a fantastic rise. Check it out …
Once again, the COT report has shown extremely bearish bets on palladium on four occasions over the past decade. But rather than falling further, the metal took off in each case …
Palladium climbed 33% after an extreme drop in 2012. This was followed by two similar cases, each leading to rallies over 60% of the metal … not to mention the 56% move after the opportunity from last year.
In short, sentiment towards palladium is as bearish as it gets. And if history is any indicator, a rebound in the metal is likely.
You will have to wait for palladium prices to rebound before buying. They still tend to go down right now. But once that happens, be ready for a big boom.
The COT report is one of our favorite tools for investing against the grain. This shows when traders go too bearish or too bullish … signaling a reversal is likely. Recently it highlighted a product that could be on the verge of going down … To find out more, click here.
“If you catch these breakouts in real time, they can lead to significant outperformance,” writes Chris. A recent signal in the markets shows great upside potential in a group of stocks. This is an area of the market that you may not know … Read more here.
GLOBAL LICENSED MEDIA PROVIDER MAKES THREE-DIGIT WINNINGS
Today we are looking at a business that is attracting subscribers …
Regular readers know we wrote about the power of repeat sales. A great way to harness this power is through subscription models, where customers “rent” continuous access to services. This leads to more consistent income. And a media company is pivoting to this model …
Shutterstock (SSTK) is a $ 4 billion provider of photography, video and music. It helps businesses around the world to authorize the media they need for their own communications. The company aims to attract more users as regular subscribers – an approach that drove sales up last year … From 2019 to 2020, Shutterstock subscribers grew 45% to 281,000 and Subscriber revenues increased 12% to $ 265.3 million. And with 321,000 subscribers in the last quarter, this growth continued.
As you can see, SSTK shares have also taken off. The stock has risen 220% in the past 18 months, recently hitting a new all-time high. As long as companies around the world pay for access to licensed media, Shutterstock’s success should continue …