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 |
Maybe Tuesday's big rally day was a false signal. The market is still undergoing significant distribution as shown by the large number of new lows on both major exchanges. However, I still think we are nearing a bottom based on a number of technicals including the oversold bullish percents. IBD wrote today that Tuesday's rally lacked the volume to qualify as an initial rally day. This type of call is what they do best so I will gladly defer to them.
The commodities are unchanged from last week in terms of the 40-week moving average. Most are in uptrends although there has been some weakness among the commodities where prices were extended such as oil and gold. The currencies showed similar moves with the way oversold US Dollar finally bouncing and the overbought Euro, Pound, AU-dollar, NZ-dollar and CN-dollar all pulling back from their extended levels.
The Euro zone is weakening and lower rates are expected. This will help the US dollar so it may be a while before stocks tied to currency weakness lead the market like they did from mid August to mid October. For the next leg up I like defense, computer tech, bio tech and alt-energy tech.
The Market Vane Commodity Sentiment survey is unchanged from last week at 64% bulls which indicates continued bias in favor of commodities, but not as hot as last winter and spring.
I really like the chances for the US Dollar to rally from the current level, at least up to the 40-week... which is also major resistance. Oil and gold are likely to pull back and it isn't clear whether that helps or hurts equities at this point. But if there is a rally, a pullback in oil would seem to favor tech.
I'd feel a whole lot better about the world economy if copper prices hold above this up trend line. Now that oil and gold have corrected, this is the commodity to watch.
