Each Friday, we highlight the key trading themes of the week, along with companies and sectors investors should be keeping their eye on.

As part of the weekly recap for Stockhead, our Head of Trading, Trent Primmer, was interviewed to share some trading highlights of the week.

Trading highlights

The ASX is holding above 7,000 and IPO activity remains lively, but tech stocks are officially on the nose.

And for Trent, the key momentum shifts on markets this week reflect a consolidation of recent trends; the commodity cycle is in full swing, while post-COVID capital flows into high-growth tech are now receding. He said:

"It’s good to see that trend continuing through the conversations we’ve been having.”

He described the commodities cycle as a “logical investment theme”, as multiple post-COVID tailwinds spur activity on the demand side following a period of under-investment in supply.

“It’s almost like a lag effect as investors move into these commodity themes. If you go back a year ago, we knew there was going to be big budget spending on infrastructure. And I think in Australia the way we tend to get out of problems with the economy is through our commodity markets, which is the main reason we didn’t have a recessionary period in the (2008) financial crisis.”

    - Trent Primmer, Head of Trading

Meanwhile, the key post-COVID drivers of tech — such as rock-bottom interest rates and changes to living patterns in the absence of a vaccine — are starting to recede.

Trent said surging valuations have left the sector “overpriced”. He added:

"I think it’s a sign of risk in the sector when any market jitters are causing these tech names to sell off so rapidly.”

Afterpay (ASX: APT) and Appen (ASX: APX)

BNPL leader Afterpay (ASX:APT) closed below $100 yesterday for the first time since December, while market darling Appen (ASX:APX) is back below $12 for the first time since 2018. Trent said:

"It’s a risk you don’t necessarily want to be taking as an investor, and I’d favour a portfolio geared towards commodities in this kind of market.

Stocks to watch

Speaking of commodities, after highlighting some junior copper explorers last week, Primmer turned his attention to the nickel space.

A key input in the electric vehicle thematic, nickel prices have broken through $US17,000 per tonne following a sharp fall in February.

Mincor Resources (ASX: MCR) and Poseidon Nickel (ASX: POS)

Tying those broader sector tailwinds to an improved risk/reward ratio for ASX small cap, Trent highlighted two junior nickel explorers — Mincor Resources (ASX:MCR) and Poseidon Nickel (ASX:POS) — that should be on the investor radar.

“If you look at POS in particular that’s a stock with a fairly low entry price. So if an explorer like that gets any significant finds, they have the potential to rally strongly on the back of this broader commodities strength. So I think that makes for a good low-cost entry point to the space if you want to add some more speculative bets to the portfolio.”

                    - Trent Primmer, Head of Trading

Chart of the week

Lastly, while Trent has no strong opinions on the direction of crypto assets, he said he’d be remiss if he didn’t at least mention the 2021 Dogecoin extravaganza.

Adding to the intrigue, Stockhead’s Derek Rose reported last week that wallet data suggests one Doge whale owns almost 30 percent of all the coins on issue (worth $US28bn).

Why is it worth $US28bn? Because Dogecoin has climbed by around 14,000 per cent, just in 2021 alone.

At Stockhead we’re prone to using the phrase “eye-watering” to describe big stock gains, but in this case it’s fairly apt.

To close out this week’s Barclay’s Bull or Pearce take, here’s what the Doge rally looks like in chart form (six-month):

To read the full Stockhead's article, click here.

Trading equities is all about having access to the right investment opportunities and making decisions based on accurate, unbiased information. Often, this means hours of research on a daily basis, keeping up with several ASX announcements, understanding economy-impacting events and regularly consuming broader news updates.

Our Equities Trading team, backed by our independent research department, is the ideal solution for said situation. Our clients receive access to exclusive investment opportunities, daily ASX research reports, our expert weekly outlook on the Australian markets and direct access to our equities traders.