Thursday, June 12, 2014

The 2 hour "pattern" since May and what it tells us about what's coming up

In my "Daily Commodities Report" I discussed a certain 'pattern' that I'm not sure many will be able to follow. Using the Commodities Index (DBC) and arrows a representation of this 'pattern' can be seen below.

With almost all commodities (to varying degrees) we had a '1' region which was a wide incline channel. What followed, particularly for CORN and others was a narrower/sharp decline (characterized by the '2' region). DBC then developed a very wide '3' region while some commodities barely developed one at all. CORN is an example where the '2' and '4' region basically became connected with no '3' region at all. Alternatively GLD and SLV developed a shallow and modestly spaced '3' that did ascend whereas URA barely had an ascending '3' region at all (recall it appears almost flat now). Some commodities have jumped the gun, WEAT stands out in my mind as well CORN, by declining very sharply into a '4' region. With the contact made by DBC on its proposed upper resistance line I feel that commodities such as WEAT and CORN have shown what the future trend will be in the coming sessions. In other words this is a pattern that will be seen to varying degrees with all commodities. As I will discuss on the weekend with the daily charts the beginning of a bearish period that alluded to a week ago I think is finally coming to fruition.

As DBC is a composite of many commodities such platinum, palladium and crude oil, its over-accentuated '3' region is due to the levitation provided by those commodities and out weighing the decline of others. My thesis for the coming sessions is that the pattern will catch up to the stronger commodities.