From the TTI Trade Desk: Commodities have been dead money for a long time - until now.

Randy breaks down the breakout, why it matters beyond metals, and why Materials are the cleanest equity spillover to watch.

Here’s why this might be the most important breakout this year.. -Hamilton

Commodities are basic goods. They're used for both consumption, like wheat and pork bellies, or production like steel and copper.

When most people think of financial markets, they think stocks or maybe bonds.

It’s rarely commodities.. and for good reason.

Commodities as a basket have gone nowhere for the better part of four years while stocks pushed to new all-time highs.

And capital stuck in “dead money” is capital that can’t compound elsewhere.

The only interesting part of commodities has been metals.. well, that was until this year.

Commodities At 2-Year Highs

The Commodity Index (DBC) has broken out into 2-year highs:

We haven't seen commodities at this level since September 2023.

This breakout is significant because it's a sign that the broader commodities basket is gaining strength - not just metals.

The fund’s top ten holdings (outside of cash & cash equivalents) include: gold, oil, copper, silver, aluminum, natural gas, and cattle futures.

It’s a mixed bunch.. and that’s exactly why this is such a big deal.

When you see a diversified commodities basket breaking out, that’s a market-wide shift.

Commodities are no longer interesting just because of metals.

Price is confirming broader participation, and it’s creating ripple effects.

Commodity-Related Assets are Outperforming

When I say commodities are having a good year, I may actually be understating it.

They're off to one of the best starts of the last decade against the S&P 500:

The worst performer of the group, crude oil, is up 10% YTD—over 8% better than the S&P 500.

Let that sink in. The worst performer in this group is beating the broader market.

We’re finally seeing some of the most overlooked areas wake up with commodities:

Emerging markets? Long-time underperformer, but EM countries are rich in resources. When commodity prices rise, their economies often improve.

Energy? Up big against the S&P 500. Higher oil prices can mean higher profits for energy companies (all else equal).

But there’s another sector that’s directly tied to commodities - one that doesn’t get as much attention and has also just woken up.. basic materials.

The Materials-Commodities Connection

Basic materials represent raw, foundational inputs used to produce finished goods.

These companies live at the intersection of commodities: they either buy commodities as inputs for production or produce commodities themselves.

That’s why basic materials and commodities are so tightly correlated.

It’s no wonder we’re seeing breakouts in both:

The last time we saw commodities break out to multi-year highs was 2020–2021 coming off the pandemic lows.

From March 2020 to January 2022, $DBC rallied over 80% while $XLB was up over 110%.

Materials actually outperformed before rolling over in the 2022 bear market.

I don’t know if XLB rallies 100% from here.. but history says pay attention to materials when commodities break out.

Inside of TTI, we already own some great names like Exxon Mobil (XOM), Ero Copper (ERO), Kinross Gold Corporation (KGC) and more..

But here's the thing.. this trade is just getting started.

I’m treating this as a theme signal - not a one-day trade.

The odds of this breakout in the Materials sector rolling over after spending the last few years consolidating are very low.

So I'm going to keep doing what I'm already doing..

Finding the leaders, buying them, and waiting.

It's worked so far. I have a hunch it'll keep working into the future.

There's always an uptrend somewhere,

Randy
Analyst, TTI

PS. A note from Hamilton:

Every day I talk to traders and investors who tell me the same thing: there isn’t enough time. Not enough time to watch markets, filter noise, and still live your life.

We’re launching something new next week to fix exactly that. Less time behind screens. Fewer trades. Bigger wins. A plan you can follow in under an hour a week.

If you’re interested, reply to this email with BLUEPRINT and I’ll add you to the waitlist. Details soon.