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 |
Market Vane is a sentiment survey of commodity futures advisors, and is used by futures traders. The survey result can be obtained for free via Investmenttools. The survey has been bullish for a long time, and I had been using it incorrectly as a contrarian indicator. However, the publisher states that it is better used as an indication of the current short-term trend, with the idea that investments in commodity futures should be in line with the trend. I think the facts support the view of the publisher because this survey has generally been in sync with the trend in commodity prirces. So this survey has to be viewed separately from the others which poll investors regarding equities, and are used instead as a contrarian indicator. Long story short, this survey is bullish for commodities.
The focus is on energy at the moment. Oil is at new highs, heating oil is at an old high, gasoline is breaking above short-term resistance and Uranium is back above the 40-week and in an uptrend again. (Also, today some of the solar-related companies broke out higher in nice chart patterns.) Strong commodity prices are a plus unless prices move too high too fast, which is what we are seeing at the moment. Additional caution towards the equity market is advised if energy prices continue to move higher at an accelerated pace.
Maybe we'll get a break and these prices will start to moderate, at least short-term. Oil is extended above the upper channel and looks like it could pullback to retest the 80-level, and heating oil is at resistance where it might consolidate a bit before breaking out. Gasoline looks like it wants to challenge the highs of the spring which could hurt retail spending, but that may take a few months.
Natural Gas prices have been strong in October along with other energy commodities, and it is probably only a matter of time before there is a strong break out in price above resistance. Natural Gas is a good alternative to oil because it is domestically produced so prices aren't pushed higher by a weak dollar, and it is a much cleaner burning alternative to oil while also providing political independence.
Finally, Uranium is joining the party after a huge correction. It might pause or pullback a bit here, particularly if oil corrects, but I think this commodity ETF and the Uranium-related stocks are probably presenting a good opportunity.
