Look, I’ve been saying it for a couple of weeks now—this market is stretched. You can feel it. Metrics don’t lie. When you’ve got 80–90% of stocks trading above their 20-, 50-, and even 200-day moving averages, you’re not in the early innings of a bull trend—you’re deep into extra innings hoping the lights don’t go out.
We’re seeing short-term overextension, especially in tech. NASDAQ stocks above their 50-day hit 85% recently. Same thing on the 20-day. And yeah, semiconductors have been the poster child of momentum, but at some point, gravity has its say. And that’s where we are. I’m not saying the sky’s falling, but we’re due. A 5–10% pullback wouldn’t just be healthy—it’d be welcome.
What really jumped out to me, though, was the move in energy and commodities...
Honestly, I thought gold would have more to say given the dollar backdrop and euro strength, but it’s been flat. Chinese stocks? Those caught a bid despite tariff uncertainty. Still, the real fireworks are in copper.
Copper’s ripping. FCX has been showing bullish prints for two weeks, and then we get this news about a 50% tariff on imported copper. That’s massive. If that holds, U.S.-based producers like FCX become the kingpins overnight. And let’s be honest—this isn’t just technicals, it’s geopolitics, it’s trade, it’s macro. And that’s what makes it so powerful. You get a physical commodity like copper getting tariffed, and suddenly supply becomes a serious issue. That means prices have to move, and the beneficiaries are obvious.
Now here’s where it gets interesting for traders. I talked about Devon and Apache. Both got big option prints—those are the kind of clues I look for. Devon’s setup was classic gamma squeeze stuff. Contracts move from out-of-the-money to in-the-money, dealers start hedging, and suddenly the stock’s running. I liked the setup but didn’t catch it early enough. That’s the game sometimes—opportunity cost is real.
And then there's oil. We’re in backwardation, which, despite what most retail traders think, is bullish. It’s a reflection of supply stress—buyers are paying more for current delivery than they are for future contracts. That’s a signal. It means refiners and hedgers are willing to pay up now, and that implies demand is sticky or growing while supply is constrained.
So where’s the edge? It’s in the producers. I broke down Devon and Apache, and yeah, both are trading below fair value. Devon’s margins are better, outlook’s more stable, and it’s reacting to price signals quicker. Apache’s undervalued too, but Devin’s the cleaner trade if you want exposure.
Bottom line: the market's overextended, tech’s ripe for a breather, and the real opportunity might be in commodities—copper, oil, and select energy names. Just don’t chase. Wait for the pullbacks, read the prints, and stay tactical. Because the macro may be muddy, but the trades are crystal clear if you know where to look.
- Brandon Chapman, CMT