Monday, June 02, 2014

Daily Commodities Report:

Interesting things are happening in the commodities market on the eve of an EBC announcement on Thursday. Draghi has finally convinced EU partners that quantitative easing is necessary and will begin (apparently) making asset purchases. Inflation is very low and recently reported in Germany at 0.6%, well below the mandated 2.0%. The ECB needs to act and good account of what can be expected has been thoroughly detailed in Zero Hedge's report.

Agriculture: DBA
DBA continues to fall. No new changes to report.
  • MACD histogram is quite negative with downward crossovers on the MACD signal lines.
  • TRIX has also crossed over downwards.
  • Slope on the short PPO indicator is horizontal, meaning a bottom on this channel might finally have been put in, but without some convincing longer term movement in the other direction, I think this is just going to tap the upper limit of the channel and continue downwards. 

Aluminum: JJU
JJU I believe to be in the process of cresting. Convincing signals have not emerged however so patterns have been put in place. JJU is listed as a "weak sell." A stronger pattern may emerge on Tuesday or Wednesday.

Coal: KOL
KOL has show a little life today after bouncing off of the $18.31 resistance line which has meant the momentum indicators have moved up. Only two convincing taps have been made on the upper channel before moving back down so I believe this movement is no different. Contact should be made with the upper limit at around $18.50 before turning back to the resistance line set at $18.20. Interesting to not though that on this decline KOL has spent most of it's time in the upper half of the declining channel.

Coffee: JO
I think coffee is imminently going to break resistance at $33.80. I do not believe a transition to an incline channel is imminent.

Commodities Index: DBC
I said over the weekend that DBC was in a declining channel and that's exactly what we're seeing here (light blue in colour). It looked like a break was going to happen, but this was anomalous. On the hourly chart DBC is a "buy."

Copper: JJC
Because most the charts precede when the website was started, a "sell" signal might have been issued on JJC back in May 15th or so. We're coming up to a resistance that has been approached twice at about $38.83. Longer term indicators are not showing convincing movement beyond this so $38.30 is probably a good time to "sell/short." I believe a transition to a negative channel should start around the 9th (my birthday) when it might make contact with the lower limit of the blue channel.

Corn: CORN
CORN similarly has some distance to fall before moving up. Indicators are showing some signs of life but a convincing move upwards has not been made on the short term PPO indicators. A "buy" signal might be issued in the next few days, however in the meantime we will need to hang tight.

Cotton: BAL
Over the weekend BAL was listed as a "buy" and that order stands. A breakout is imminent although a small decline might be seen between now and then.

Crude Oil: USO
A "short/sell" order was given on USO recently and that order stands. It should have been issued sooner but infortunately some glitches had to be worked out.

Gold: GLD
It's possible that GLD has turned a small corner. I had not appreciated the size and significance of the movement made in the last trading day in May. Since it didn't gap down today GLD has continued horizontally. This may be one of the brief rebounds up before it continues downward again (please see my weekly note) since declines never happen in straight lines. I do not advise buying as it will continue to move down. There is not very much data to work with here so this is very tentative.

Silver: SLV
SLV seems to be following GLD's playbook and I'm not sure quite what to make of it. It feels like intermediate bottoming action however I still do not advise buying. As stated in my discussion of gold, as all equities decline sometimes rebounds take place periodically while the overall trend remains 'down.' I think more bottoming has yet to come. I'll tell you when you can get excited.

Lithium: LIT
A "short/sell" signal was issued a while back and the downward movement has picked up steam today. It would not be unreasonable to see this tap the lower limit of the channel (second week of June perhaps). It should be noted that based on the width said channel, this is an overall direction we can expect to be in for some time.

Natural Gas: UNG
Momentum indicators are showing a lot of strength behind this current channel. Natural gas is listed as a "buy."

Palladium: PALL
I believe PALL is either transitioning to a new channel or going to bounce off the lower most limit of the channel. In the meantime, our "sell" signal still holds.

Platinum: PLAT
PLAT is still in serious decline. No change in signal so far.

Sugar: SGG
Contact at some point will be made with the lower band ($54.25) again before it tries to bounce back. We should see this in the next trading session or two at which point that would be an ideal "buy" signal.

Uranium: URA
URA continues to be in a modest decline and new channel is beginning to take shape (although I don't have much to work with).

Wheat: WEAT
An imminent break is expected with WEAT. A "buy" signal is listed.

Copyright © Jakob Richardson 2014