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 Crude Oil Continuous Contract (CL.F) & iShares Transportation Average ETF (IYT)

The turn of the month has been particularly choppy for North American markets which retreated into the end of January, bounced back to start February and have stabilized into midweek. The stampede into and then back out of Reddit driven stocks such as GameStop had somewhat of a ripple effect across markets between short squeezes and margin calls. This effect has already started to subside with some of the Reddit stocks falling back, while an attempt by some to spark a rally into Silver quickly fizzled out. There have been some significant divergences between sectors as the week has unfolded. Marijuana stocks, which we featured in last week’s issue of the Equity Leaders Weekly, have continued to rally while retailers and transports have been crumbling.

This week’s economic news, including manufacturing and service PMI reports, US construction spending and US ADP payrolls have come in better than expected, with US employment rebounding in January. Overall, it appears that the impact of COVID Wave 2 on the world economy has been less severe than a year ago, and with case counts continuing to fall in many regions/countries, investors may be differentiating between winners/losers and looking ahead to potential reopening's later this year as vaccines roll out.

Commodities have been climbing this week, particularly the energy group. Anticipation of improving demand and indications that OPEC members have been keeping to their quotas has helped to boost crude oil. Meanwhile, natural gas and heating oil have soared as temperatures plunged and big winter storms rolled through eastern consuming regions.

Agricultural commodities have also been rallying this week, led by livestock and some grains.

In the coming week, earnings reports continue to roll in with the focus turning to Canada where results are due from the big 3 insurance companies, senior pot stocks, gold producers, forest products and others. US headliners include Walt Disney, Uber, Twitter, Coca-Cola and others.

In this week’s issue of Equity Leaders Weekly, we take a look at recent strength in the price of crude oil and recent weakness in transport stocks.

Crude Oil Continuous Contract (CL.F) 

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