And the thing is that it’s no longer outperforming.
Conversely, it’s lagging. It’s generally the case that when leaders lag in any market, then this market is likely preparing to decline. This is happening as early buyers exit based on stock being overpriced, and at the same time, the general public investors in other companies that are cheaper – hence other stocks outperform temporarily.
That’s exactly what seems to be going on with stocks right now.
It’s not just theory, either. I marked two other cases when NVDA’s top preceded the top in the S&P 500. The former was already after its top while S&P moved higher. This didn’t last, and big declines followed.
Now, this is important because if we’re going to get a bigger slide in stocks, PMs and miners are likely to react. They reacted significantly in 2008 and 2020 – especially silver and mining stocks.
Now, silver has multiple reasons to be resilient right now, but mining stocks can still slide profoundly. And that’s exactly what I think is likely.
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Przemyslaw K. Radomski, CFA
Founder, Editor-in-chief
