Thursday Commodities and 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 |
Commodity prices are holding up, and this is good news for the economy. It is unlikely that the economy can go from 5% quarterly growth down to a negative recession growth level without commodities taking a huge hit. So you have to be very encouraged by these strong prices. That's not to say there aren't some concerns. Industrial metal prices are weak and just hanging on at the lows of a multi-month sideways trading range. A break down for these metals would not be good. Another concern is also what many people are talking about which is the strength in energy prices. If they move too high too fast it could punish the economy at a time when it can't handle it.
56% commodity bulls is nowhere near as strong as this survey was in the spring and early summer, but still indicates commodity prices will retain current levels. Firm commodity prices remain an important indication that the economy is still slowly growing and that works in favor of stocks.
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 publisher states that it should be 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.
If oil prices remain near their current levels, it is likely that uranium prices will start to firm up again after this retest of the lows is complete. The retest looks to be part of a consolidation of the huge gains in 2005 and 2006, and after it is complete the uptrend will resume. I really like the looks of this chart for future gains, but the wild card is oil prices.
The symmetrical triangle pattern for gold noted last week has worked out well. The initial target is 88. I believe that this may be the final major leg up for gold since we are now in the last month or so of the strong seasonal period. Besides, gold has made a very nice percentage move since the big break out in September and probably needs to consolidate and rebuild for a number of months.
