Thursday, June 12, 2014

Daily Commodities Report:

Serious headwinds have presented since I last wrote:
  • Price of oil is likely to rise (now listed as a "buy") due to events in Iraq
  • Budget gridlock and debt limit increases are likely now with Cantor defeated in Virginia
Agriculture: DBA
Because of the general fall in the market I have not kept my shares in DBA and have taken a small loss. At the time of writing the channel is holding with "buy" singles still present on the RSI indicator. The problem I have is that many commodities such as CORN have also taken a similar overall pattern: narrow sharp fall followed by a fat shallow bounce followed by a continued wide fall. I fear that DBA might assume this pattern as well.

Coal: KOL
The sell signal I issued back on the 9th was beautiful. It currently has gone a little outside its current upward channel but another data point is needed to find out whether we might be returning to an overall downward channel. At the time of writing the momentum indicator has crashed pretty furiously so I'm inclined to say 'no,' this blue upward channel may hold. On the daily chart however we are looking at the its third tap which spells trouble the fourth one arises. On the daily chart KOL is not looking good.

Coffee: JO
JO has been a bright spot, but if you look at the overall pattern it has assumed it too is taking on one similar in appearance to DBA and CORN. Here, however, we are not seeing the same sharp decline experienced by those two in addition to a much wider subsequent incline. JO is right now floating around resistance levels set back late March and early April. If you have profits to take, I'd say 'take them.' I don't see much more ascent from here. Horizontal movement likely until it resumes it's fall.

Commodities Index: DBC
Despite the complaints I'm making about DBA and KOL, DBC appears to being doing well. The upward channel has widened to include the 0.85% rise this morning and currently finds itself resting on a mid-channel resistance line of the larger light blue declining channel. This may go to about $26.30 after-which sales and shorts should be made. Listed as a "sell."
The daily chart is included just to show that although it broke through the green line on the two hour chart it has tapped the upper channel limit on the daily chart perfectly. On the daily chart a higher lower should be put in place for us to make a "sell" signal.

Copper: JJC
I have not called JJC quite so well. Please note the familiar pattern I have brought to your attention. On the hourly chart it continues to break down. This will be the fate of commodity stocks the more I examine it.

Corn: CORN
Here the same pattern has actually played out, however the small rising blue channel we have become accustomed to seeing after the sharp fall is non-existent, I just widened the channel instead to a larger decline (an indication of how weak the rise was for CORN, symbolized by my stupid "buy" signals of late). On a more macro time scale I expect more of this pattern to be seen for all other commodities. This could fall to $29.50.

Cotton: BAL
Cotton has assumed a nice basing pattern but the momentum has failed to carry on the hourly chart. This will be reviewed closely on weekend for the daily charts because the RSI's are still looking good. 

Crude Oil: USO
With every rule there is always an exception. USO is being governed by the development of some very serious political events in Iraq threatening about 3.5 million barrels of oil a day. I wish very much for a peaceful and immediate solution to the violence. A "buy" was previously issued on the 10th and it stays

Gold: GLD
I was a little premature in my issuing of a "sell" for GLD but I still maintain it. Note how the same pattern is seen here as in other commodities, albeit in perhaps the most optimistic configuration: a short narrow decline followed by a wide and reasonably sharp incline. For those proceeding with their hourly short term "buys" proceed with caution. I have to say though, GLD has impressed me for the first time in a while!

Silver: SLV
See above for GLD which is unfortunate since it had a superb day (up 1.73% at the time of writing).Critical that my weekend review is read since some interesting developments have now taken place. SLV has climbed a little too quickly for my liking and that means volatility is introduced.

Lithium: LIT
A "sell" was issued a few days ago and it stands. Not much to add except that a gentle pullback is taking place.

Natural Gas: UNG
My "sell" on the 4th was correct, although it took some time to eventually unfold, however the 5.00% increase today was not anticipated. I'm shocked. The channel has been widened, but be careful as a significant resistance is approaching at around $26.35. A "sell" will be issued at that point. I think I will be making some adjustments to the UNG chart because I am simply not keeping up with the movements and implied volatility very well. The daily chart however is fine, but my two hourly chart is wild.

Palladium: PALL
My previous "buy" was well placed however just as SLV jumped almost 2% palladium has fallen almost 4.5%. Brilliantly though it has stayed within my incline channel. I do eventually expect an imminent breakdown from this channel and then resume its upward march. Review of the daily chart is necessary so stay posted this weekend. I would list PALL as "neutral."

Platinum: PPLT
This continues to be a bit of a puzzlement. My chart would have to be widened enormously to include yesterdays highs. Today, it came back down to the lowermost resistance line of the channel. Let's watch it from here. Listed as a "neutral." PPLT also has a hint of the pattern discussed with other commodities. The incline nature of the blue channel still looks strong and there are significant political developments behind a further increase in price, however I think in my mind this is offset by imminent commodity weakness in the general market.

Sugar: SGG
Sugar is breaking down on the hourly chart. Let's have a closer look at it on the weekend with the daily charts because this exploded like coffee did at the beginning of the year despite a near identical pattern.

Uranium: URA
The same pattern is being seen. If you've made some money on the hourly chart I'd take profits. I'd list this as a "sell." Momentum is just not carrying this rise through.

Wheat: WEAT
The chart for WEAT is a perfect personification of the general pattern being discussed. The interesting thing is, the pattern hasn't yet been assumed for all commodities yet. WEAT has jumped ahead of what I think will unfold in the coming sessions for all other commodities.