INK Ultra Money: When stocks trade like commodities during a summer of complacency

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On Monday and Tuesday we heard from two outstanding guests on Real Vision. Milton Berg, Founder and CIO of Milton Berg Advisors, joined Ed Harrison yesterday to highlight a series of bullish signals that are flashing for stocks. There is only one problem. The signals are late. That has led Berg to wonder if US stocks are now trading more like commodities than equities.

On Tuesday, we had one my favourite guests, volatility master Charlie McElligot, managing director for cross-asset strategy at Nomura Global Markets.

He suggests to Ed Harrison that many investors have become complacent in shorting volatility with many quantitative models dropping off the rough months of February and March. That has allowed some big players to start writing options and doing other strategies that could leave them vulnerable as we close out the summer. He sees the crowded QQQ trade as being risky right now and he is also concerned about gold, particularly if we get a spike in bond yields on the back of rising fixed income supply issuance.

The technology angle sounds a lot like some of the ground we covered in our Monday morning report warning about rate risk for Real Matters (REAL). His cautious stance on gold over the next few months mirrors our take towards Venture stocks in yesterday's Market Report after their sizzling run. 

Rising rates could provide real headwinds (free)

McElligot also suggests that we could see investors take profits in technology stocks and move them into cyclicals. If he is right, perhaps it will help to keep the INK Canadian Index on a roll along with constituent Tourmaline Oil (TOU) which we feature in today's morning report.

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