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 |
Well, here we are. Back in IBD rally mode. But with a warning from IBD not to move too quickly to fill out positions and not to tap into margin until the market proves itself. Good advice I think. Also, here are two news sites you might want to check out, IndexIndicators and InTrade Prediction Markets.
The majority of commodities prices remain strong and above the 40-week, but there are signs of some weakening. Energy-related commodities are all pulling back from their highs, and industrial metals have fallen below the 40-week. It makes sense that the hot commodity price increases will cool with a considerably weaker global economy. This means that this new equity rally will probably not be led by energy and materials as rallies have over the past few years. But so far this graph of the commodities isn't pointing to serious weakness. As long as commodity prices maintain current levels, then the trend in commodities is favorable towards the economy and equity prices.
The weak Market Vane survery result provides more evidence that commodities and the commodity-related stocks will probably not be the best place to be invested over the next few months.
The brutal decline in the US Dollar has favored commodities, but now the US Dollar has a good chance of bouncing back a bit. Central banks are all likely to start lowering rates and this will help dampen these dramatic increases in world currencies versus the US Dollar. The currencies of the two top commodity producing industrialized nations are both pulling back after gapping lower off runaway peaks. This works against commodity prices.
