eyeQ: an attractive entry level into this ETF
Experts at eyeQ have used AI and their own smart machine to analyse macro conditions and generate actionable trading signals. Right now, there's a bullish signal in a hard-hit sector.
29th January 2025 10:12
Huw Roberts from eyeQ
"Our signals are crafted through macro-valuation, trend analysis, and meticulous back-testing. This combination ensures a comprehensive evaluation of an asset's value, market conditions, and historical performance." eyeQ
- Discover: eyeQ analysis explained | eyeQ: our smart machine in action | Glossary
Global X Copper Miners ETF USD Acc (LSE: COPX)
Macro Relevance: 66%
Model Value: $42.42
Fair Value Gap: -11.66% discount to model value
Data correct as at 29 January 2025. Please click glossary for explanation of terms. Long-term strategic model.
Arguably the million-dollar question right now is: was Monday’s equity sell-off a reversal or a rotation?
Does DeepSeek blow up a richly valued tech sector and, by extension, threaten the broader US equity market? Or is this a micro story - it hurts NVIDIA Corp (NASDAQ:NVDA), but cheaper access helps plenty of end users of generative AI and therefore the broader economy?
From an investment perspective, the latter argument points to a rotation trade. Move some of your holdings out of technology and into other sectors. Which sectors?
For many this is a green light to look at cyclical plays, investments that perform in a strong economic environment and help cushion you from any resurgence in inflation.
If that's your view then note, on eyeQ, the exchange-traded fund (ETF) that provides exposure to copper miners now sits 11.7% cheap to our model. Overall macro conditions are moving sideways within a broad range.
But the miners were hit hard yesterday - Global X Copper Miners ETF USD Acc (LSE:COPX) fell as President Trump threatened to include copper, aluminium and steel among the areas where he would impose tariffs.
There is no escaping the volatility a Trump presidency brings. Policy announcements will come thick and fast via social media posts. Markets will gap up and down accordingly.
The only thing a retail investor can do is stick to a framework where they identify what they like over the medium to long term, and then await a headline to provide an attractive entry level.
In the case of COPX, we have high macro relevance and a big enough Valuation Gap to trigger a bullish signal. For equity bulls looking to diversify away from tech into other sectors, COPX offers attractive entry levels.
Source: eyeQ. Past performance is not a guide to future performance.
Useful terminology:
Model value
Where our smart machine calculates that any stock market index, single stock or exchange-traded fund (ETF) should be priced (the fair value) given the overall macroeconomic environment.
Model (macro) relevance
How confident we are in the model value. The higher the number the better! Above 65% means the macro environment is critical, so any valuation signals carry strong weight. Below 65%, we deem that something other than macro is driving the price.
Fair Value Gap (FVG)
The difference between our model value (fair value) and where the price currently is. A positive Fair Value Gap means the security is above the model value, which we refer to as “rich”. A negative FVG means that it's cheap. The bigger the FVG, the bigger the dislocation and therefore a better entry level for trades.
Long Term model
This model looks at share prices over the last 12 months, captures the company’s relationship with growth, inflation, currency shifts, central bank policy etc and calculates our key results - model value, model relevance, Fair Value Gap.
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Disclosure
We use a combination of fundamental and technical analysis in forming our view as to the valuation and prospects of an investment. Where relevant we have set out those particular matters we think are important in the above article, but further detail can be found here.
Please note that our article on this investment should not be considered to be a regular publication.
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