Thursday Commodities & Currencies
Disclaimer: All charts and comments are intended for education and discussion purposes only. No investment recommendations are being offered. Please do your own research and take responsibility for all investment decisions that you make. Questions and comments related to this post are encouraged. | MON - Sector Strength | TUE - Interest Rates | WED - Market Breadth | THU - Commodities & Currencies | FRI - Market Sentiment | SAT - Bullish Percents | About | contact: HeadlineCharts@gmail.com |
The market is partying right now with almost everything going its way. But the overbought indicators remain in place so caution is needed.
This chart below is getting boring but it serves its purpose well. Most of the various commodities are above the 40-week average and headed higher in a solid uptrend, but at a pace that hasn't scared investors away from stocks and hasn't raised red flags yet at the Federal Reserve. These strong uptrending commodity prices correspond with the uptrend in commodity-related stocks, the relatively low short and long-term interest rates and the very weak US Dollar. At the moment, the US stock market is thriving on the world-wide economic strength indicated by higher commodity prices, and therefore the trend in commodities continues to be supportive towards overall equity prices.
Usually the price trend of the shares of commodity-related stocks will move in anticipation of the trend in the price of the commodity being produced. If that rule hold true, the recent strong break out of natural gas shares is signaling future strength in natural gas commodity prices.
We're having this wild commodity, inflation, weak dollar, low interest rate party, and gold shares decided not to come. Gold is usually the life of the party when commodities are surging, and yet the companies the mine for gold are about the only companies not celebrating at the moment.
The two weak currencies, the Yen and US Dollar. All other major currencies are strong. Japanese short-term interest rates are something like .25%, yet the US Dollar is even weaker than the Yen as shown by the ratio chart.
Sorry these charts are a bit out of order. The gold mining shares are moving sideways and will soon reach a point where they either break out above resistance, or just by moving sideways, they'll break below the lower uptrend support line.
More US Dollar weakness and its impact is shown below. The US Dollar weakness parallels the weakness of the US stock market compared to the world stock market.
