Wednesday Commodities Round-Up

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A.) There is a lot of supply in the 40-41 area.

B.) Prices have found support at previously established price levels

C.) Momentum is decreasing, but notice that prices aren't crashing.

Bottom line: so far, it looks as though copper is holding its own.



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The industrial metals chart has the following points.

A.) Prices have been in an upward trend line since mid-February.

B.) Prices consolidated in April and May in a triangle pattern

C.) Prices consolidated in June and July in a pennant pattern

D.) Prices consolidated in August and September in a pennant pattern

E.) Momentum has decreased but prices have simply consolidated to the trend line.

Are Gas Prices Heading Lower?

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A.) Prices have broken the upward sloping trend line

B.) There is strong resistance in the upper 35/lower 36 area.



Let's look at the sell-off in more detail

A.) Prices gap down. This is a bearish development as it indicates a big change in the supply and demand picture favoring the bears.

B.). Prices print a strong downward bar, a gap, and then a second downard moving bar. This is a big development. There is also strong volume on these down days.

C.) The 10 day EMA is moving lower and has moved through the 200 day EMA. The 20 and 50 day EMA are also moving lower.

Wednesday Commodities Round-Up

Interesting developments in the copper market.

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A.) Prices are just below the long-term upward sloping trend line. Now, prices have not make a solid break through the trend line -- we don't have a strong downward moving candle. Instead we have prices consolidating just below the trend line. That could mean that instead of a break in the trend line we are seeing a new point to connect the low points; we need more data before we can make a final determination.

B.) There are three things we ultimately look for in technical analysis: reversals, continuations of current trends and divergences between technical indicators and price action. Point B looks like a rounding top pattern.

C.) Notice the MACD has been declining for two months. This tells us that momentum is decreasing.



A.) This shows us a better image of the trend break. Notice that prices have formed a very weak trend break -- the candles are very weak.

B.) Prices have run into a great deal of resistance in the 40.50 - 41 range.

C.) The 10 day EMA is moving lower and has crossed below the 20 day EMA. The 20 day EMA is moving lower as well. This tells us the short and intermediate trends are bearish.

Wednesday Commodities Round-Up

Industrial metals are in a clear and strong uptrend that started in early March. the MACD is rising as is the RSI. The RSI is just starting to approach overbought territory. However -- the RSI can stay pegged over 70 for quite some time. Notice the 10 and 20 week EMA are moving higher and the 10 week EMA has crossed over the 50 week EMA.


The daily chart shows a good advance. First notice along the way we've seen consolidation in the form of pennant and flag patterns. Also notice the very bullish orientation of prices the EMAs -- prices are above all the EMAs, the shorter EMAs are above the longer EMAs and all the EMAs are rising. Prices recently broke through areas of key resistance and are moving higher.


This is fascinating chart. First, prices broke below the lower trend line a few weeks ago. Then they consolidated below this level. This led me to thing prices were going lower. However -- and here's the key point: that was based only on the information available from the chart; it did not take the fundamental backdrop into consideration. And that is what has moved the market higher. Commodities rallied earlier this week in anticipation of a recovery.


And that increase is seen very clearly on this chart -- notice the upward gap accompanied by the rising MACD and RSI. In short, earlier this week traders saw the economy improving.

Wednesday Commodities Round-Up

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Industrial metals are still rising. The MACD and RSI are still increasing. However, prices are getting caught between the 10 and 20 day EMA on the lower side and the 50 day EMA on the upper side. In addition ---

This chart better shows the triangle consolidation pattern that is forming at the top of the rally. Also note that prices are barely hanging on to the upward sloping trend line. In addition, on the daily chart notice the MACD and RSI are moving lower. This chart tells us prices are really thinking about moving lower.



On agricultural prices, notice the chart has taken a big move lower. This is confirmed by the RSI and MACD making big moves lower.



The daily chart better shows the move lower. Notice the MACD and RSI have taken big moves lower. Prices have broken the upward sloping trendline. And the EMA are moving lower as well -- the 10 and 20 day EMA have crossed below teh 50 day EMA and are looking to make lower lows.

With agricultural and oil prices moving lower it's highly probably industrial metals will follow suit.

Wednesday Commodities Round-Up

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While the weekly chart is still in an uptrend, prices are right at longer-term support. However, the MACD and RSI are still rising. Also note the EMA picture is jumbled -- while all are heading lower the main issue is there is a great deal of congestion suggesting a fair amount of confusing about where traders want to send the market.


The daily chart shows a major correction that is moving the market lower. Notice the MACD and RSI are both moving lower in a big way. Also note the 10 day EMA has crossed below the 50 and the 20 is about to do the same. That tells us their is a pretty high probability of the market moving lower.


Industrial metals are still in a rally -- the MACD and RSI are still rising. Also note the 10 and 20 day EWA are moving higher and are providing technical support for the rally. Finally, prices are consolidating right below the 50 day EMA.


This chart shows that prices are still in a solid uptrend as evidenced by the very bullish EMA pictire -- all the EMAs are moving higher and the shorter EMAs are above the longer EMAs. Prices are currently consolidating in a triangle pattern.

Wednesday Commodities Round-Up

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The weekly industrial metals chart is still bullish. Prices are moving higher, as are the MACD and RSI. The 10 and 20 week SMAs are moving higher and the 10 week EMA is above the 20 week EMA. Prices are also right below the 50 week EMA.


The daily chart is a mixed bag. First, prices are clearly in a strong uptrend and have been since the end of February. Also note the EMA picture -- the shorter EMAs are above the longer EMAs and all the EMAs are moving higher. Prices are right below the 10 week EMA which is standard technical support. Both nother the RSI and MACD are a bit mixed.

The weekly ag prices chart is generally still bullish, but there are some chinks in the armor. First, the MACD and RSI are still moving higher and the 10 and 20 week EMAs are still moving higher. But prices gapped down this week which is never a good signal.



The daily chart also shows the gap down and the reversing of the MACD and RSI. Also look how prices have blown through the 10, 20 and 50 day EMAs. If prices continue to move lower they're going to blow out various stops.

Wednesday Commodities Round-Up

Let's take a look at gold.

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Above is the chart that bothers me the most -- and I hope I'm reading this wrong. BUT, the longer term gold chart could be seen as a reverse head and shoulders formation. This implies that gold has one hell of an upward run in the future.


I used the 6 month chart to get a better read of the the SMA picture. First, notice the 200 day SMA has been near neutral for the better part of the year. Considering the extreme moves we have seen, that's a pretty amazing stunt and implies the long-term outlook is still cloudy. However, the short-term indicators are pretty positive. The shorter SMAs are above the longer SMAs and all the SMAs are moving higher. The 10 day SMA has taken a short-term dip, but prices are just below and are using the 20 day SMA as technical support. If prices move through the 20, then the 10 day SMA will be in trouble. But until that happens, we're still in an up-swine.

Wednesday Commodities Round-Up

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The weekly agricultural price chart is still very bullish. The MACD is rising and has some room to run as does the RSI. Prices have advanced above the 50 day SMA and continue to move higher. The 10 and 20 day SMA are moving higher with the 10 above the 20.

The daily chart is also very bullish. Notice that prices are above all the SMA, the shorter SMAs are above the longer SMAs and all the SMAs are moving higher. The MACD is sill rising, although it may be approaching topped out territory for now. Also note the RSI is at technically oversold readings, the RSIs can stay pegged at these levels for some time.

Industrial prices are continuing their move higher. After rising from a consolidation pattern they formed another triangle consolidation pattern over the last few weeks but have since moved higher through that. Note the MACD and RSI are still rising. Finally, the 10 and 20 week SMAs are moving higher and the 10 day SMA is above the 20 day. Prices are using them for technical support.


On the daily chart notice the prices started moving higher at the end of February. This chart better shows the consolidation that took place from mid-April until just recently. However, prices have advanced through upside resistance on a big gap higher.

Wednesday Commodities Round-Up

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Today I'm going to look at the gold market, largely because of an article I wrote with a friend. Here is a link. The data does not indicate inflation is an issue and so far won't be for the near future. However, that does not mean investors are not concerned about inflation prospects. As a result, keeping an eye on gold prices is a good idea.


Above is a 9 month chart. Notice a rally that started at the end of last year and continued until the beginning of March. That is when investors switched from other markets to equities -- meaning gold dropped. Prices then formed a downward sloping flag pattern but have since risen through the top of that pattern.


In the above chart, notice that gold is started another rally in mid-April and has been moving higher even since. Also note the price/SMA picture has slowly turned more bullish -- prices are above the SMAs, the shorter SMAs are above the longer SMAs and all the SMAs are now moving higher.


Also note the MACD is rising and



The RSI is moving higher as well. Also note the technical divergence circled on the chart. In April gold made two lows right around 85. But the RSI made a higher high on the second low. This is the kind of technical divergence that traders look for as it gives signals in advance of moves.

Wednesday Commodities Round-Up

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Like all commodities, industrial metals took a nose-dive at the end of last year. Since then prices have consolidated in a sideways moving rectangle pattern and risen through the upside resistance line of that pattern. The MACD and the RSI are still rising, although the RSI has moved sideways for the last few weeks. Finally, prices are moving into the 10 week SMA and the 10 and 20 week SMAs are moving higher.

The daily chart better shows the consolidation of the last few weeks. Notice that prices have a slight upside bias but are really mired in a consolidation pattern. The MACD and RSI printed a lower number on the second top of the last month and a half, indicating an overall weakening. But prices have not crashed or moved significantly lower, indicating traders are contemplating their next move. The stochastics -- which are a better indicator in a trending market -- are printing a total right at 50. Although the long-term average is still moving higher (the 50 day SMA), the 10 and 20 day SMA are moving sideways. In addition, prices are tightly bound with the SMA indicating a lack of overall direction.

Like all commodities, agricultural prices took a nose-dive at the end of last year. Since then prices have consolidated in a triangle pattern and risen through the upside resistance line of that pattern. Prices are right below the 50 day SMA. A move through this level would be an important technical development. However, the 10 and 20 week SMA are tied in a tight range and neither is moving higher right now.


The daily chart is very interesting. Prices are consolidating above an important technical level. In addition, the RSI is printing right below 70 and the MACD is still rising (although it may be moving to give a sell signal soon). However, the price/SMA picture is very bullish -- prices are above all the SMAs, the shorter SMAs are above the longer SMAs and all the SMA are moving higher.

Wednesday Commodities Round-Up

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Industrial metals dropped hard at the end of last year (in conjunction with all commodities). However, prices consolidated at a bottom for about 5-6 months and have since risen through key resistance areas. The RSI and MACD have been rising along with the rally. The 10 and 20 week SMAs are now moving higher and are both below prices.



On the daily chart we could have an issue. Note that prices have formed a double top, with the first top occurring in mid-April and the second occurring in early May. But also note both the RSI and MACD printed a lower number than on the previous high. This could indicate the rally is stalling -- or at least moving sideways for now. To that end, I've included the stochastics which are a better indicator for a sideways moving market and they are giving a short-term sell signal right now.


Agricultural prices are in a good bull market position right now. After falling at the end of last year, prices consolidated. Now they have moved out of that position and are moving higher. Both the MACD and RSI are confirming the upward trend. However, the SMAs are still bunched together -- we need them to form a more bullish pattern for this rally to kick into high gear.

On the daily chart, notice we're at the end of a consolidation period. Prices rallied from the beginning of December to January, made a disciplined move lower until early March followed by a rally. Now prices have moved through upside resistance with a confirmation coming from the MACD and RSI. Notice that on the weekly chart, the RSI and MACD have a long way to go, indicating this rally might have legs.

Wednesday Commodities Round-Up

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The weekly industrial metals chart is still bullish. First, the MACD and the RSI are still rising. Prices have broken out of the consolidation pattern. In addition, prices are using the 10 week SMA as technical support. The 10 and 20 week SMA are both rising with the 10 above the 20.



The daily chart shows a mixed situation. While prices are technically still in an uptrend they have sold off from their peak a few weeks ago and have yet to move through the previous high. The RSI and MACD confirms the weakening of the price picture.


The weekly agricultural chart is bullish. Notice the rising MACD and RSI. The RSI is only at a reading around 50 so it has plenty of room to move higher as does the MACD. Prices have advanced through the triangle consolidation pattern as well. However, the SMA picture is a bit jumbled right now.


The daily chart -- like the industrial metals daily chart -- is mixed. The general trend is still up. But note both the RSI and MACD have printed a near horizontal pattern in April. Also note the SMAs are in a very jumbled orientation -- they are tied closely together. While they are technically in a bullish position (shorter above longer, all moving higher) we need more time in this position to make a solid call.

Bottom line: the long-term charts are still bullish. My guess is traders are playing two long-term trends: the eventual economic rebound and a hard asset inflation play. The daily charts show that traders are having second thoughts, but we haven't seen those thoughts bleed over into the weekly chart.

Wednesday Commodities Round-Up

Industrial metals declines sharply in the second half of last year. Since that fall they have consolidated their losses in a triangle pattern. They broke through upside resistance about a month and a half ago, but have fallen the last two weeks. The technical picture is still solid -- the 10 and 20 week SMAs are rising as are the MACD and RSI. But the RSI has dipped a bit and prices are currently standing at the 10 week SMA for support.

The daily chart adds some much needed clarity. Notice first that prices have broken the uptrend that started in late February. Prices have also fallen through the 10 and 20 day SMAs while the MACD has given a sell signal and the RSI is losing strength.


Agricultural prices sold off at the end of last year and have since consolidated in a triangle formation. While the MACD and the RSI have been increasing -- indicating a technical move higher -- prices have yet to break out. Notice that prices and the SMAs are in a tight pattern indicating an overall lack of direction.

Note that on the daily chart we have no firm direction. While prices are in a technical rally since the beginning of March, the upper bounds of the triangle consolidation are clearly keeping prices contained. The MACD provides no direction, nor does the RSI or SMA. The good news in this chart is there is no indication we'll see prices move lower. Considering the overall economic pictture, this is a good thing as it means deflation is off the table for now. But it's also possible for prices to meander at low levels for awhile.

Wednesday Commodities Round-Up

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The industrial metals market broke out of a triangle consolidation pattern a few weeks ago and has been rallying ever since. While it is currently pulling back that is to be expected after a strong run. In addition, traders are probably questioning a bit their decision to bid up prices in the face of an economy that isn't really going anywhere just yet. However, the MACD and RSI are still rising and the 10 week SMA is positive.



Agricultural prices are still bottoming in a triangle formation. Prices are still tangled with the 10 week SMA and are below the 20 and 50 week SMA. In addition, the MACD are RSI are still rising, although the RSI is a bit weak.