Sunday, June 29, 2014

Weekend Commodities Report: Daily Charts

Agriculture: DBA
I've chosen to "short" DBA as it is approaching the upper limit of the resistance line set by a gap-down a few weeks previous. This move may have been a little premature - both the MACD and histogram are beginning to plateau, but I fear some retracement of Fridays drop before a definitive change in direction is seen. Ironically the same thing may be happening when I called the "buy" a while back where the breakout from the declining channel took some time and several false starts before getting started. DBA seems to be an equity that moves a little more slowly than others

Aluminum: JJU
Reading this stock has always been a little tricky since the volume is lower than it is for other stocks, but you will notice that JJU has broken out of the declining red channel. The blue channel is now firmly in control. We have also had a close outside the red channel. Around Wendesday or so a new "buy" signal has emerged with an upper limit being $20.00.

We've been very patient this equity but I think a story is finally beginning to emerge. I expect this new blue channel to stay for some time as it is very wide, however it is rather shallow so a big retracement of the declines we've seen up to this point will not be happening. I think we'll enjoy some buy and sell signals within this new blue channel, but the breakout itself means for the longer term this is a "buy."

Coal: KOL
KOL is starting to breakdown. The RSI(14) has been declining/diverging for a long time so this was to be expected. A new (green) resistance line has emerged from all the lower highs that have been produced so a definitive move should be seen imminently. KOL is listed as a "short/sell."

Coffee: JO
A pattern very similar to that seen DBA is also seen. A "sell/short" has been issued on JO. A catastrophic fall was seen on Friday (5.28%) which I do expect to retrace next week before a final fall is seen.

Commodities: DBC
Okay, this time I got it right! DBC has a "sell/short" signal issued. The channel is a little narrow so overall the decline may remain within the larger ascending blue channel. I don't expect it break the larger overall ascent. Please be careful in the medium-term however as the lower resistance line of the ascending blue channel already has three taps on it so a larger breakdown may be in progress.

Copper: JJC
JJC has been through a whirlwind the past 3 weeks! Luckily we caught the creation of this strange horizontal area which has contained some very steep and narrow inclines and declines (which I've also been able point out). I've called a "sell/short" since it has tapped the upper resistance limit at a $38.75. The weekly chart supports a "sell/short" call.

But a thought occurs - is it possible that a larger upward channel has been created? Was the higher low on June 16th just the first contact made with the new lower limit of this ascending blue channel? Perhaps. Let's watch JJC carefully. Very conveniently some resistance areas are approaching due to JJC's gap up earlier in the week so this would create an appropriate transition zone. All of this theory is drawn in green. I can't fathom why copper priced in American dollars would want to continue climbing as the rehypothecation scandal is spreading. Price should be declining as futures were artificially inflated for collateralization. I do not have a narrative for this part of the story, so I'm open to theories.

Corn: CORN
CORN has had a weak break out and currently remains contained by several resistance lines. The other problem is that the MACD and histogram are already beginning to plateau  from the recent ascent. A long term bottom has been put in for CORN but in the immediate term I'm not forecasting any great buy or sell opportunities. Overall this fits well with Bloomberg's report that an unusually wet spring may have hurt this years crop so prices should ascend. In the meantime let's have this bottom form and take things from there.

Cotton: BAL
Me "sell/short" on BAL was perfect. Let's watch this develop but I think this decline means that it has just re-joined the per-existing descending red channel. Let's watch $48.50 for a pause.

Crude Oil: USO
Presented without comment, but weakness continues (I don't know why).

Gold: GLD
My "sell" signal for GLD remains. Indicators are beginning to show this imminent move downward. Watch for a return to $124.00 before we tap $130.00.

Lithium: LIT
"Sell/short" continues for LIT, but let's see if a pause happens around $13.35.

Livestock: COW
I issued a "buy" on Friday and that still stands (it's still early so be careful and have some tight stops). Some of my early indicators are showing the possibility of continued upward movement. I'll be watching for a breakout of $32.90. The weekly chart says that this is a very strong possibility.

Natural Gas: UNG
Presented without comment.

Palladium: PALL
Presented without comment.

Platinum: PPLT
Resistance at $145.75 is being approached but I'm not entirely sure a breakout will happen, PPLT is looking pretty strong. The next few trading sessions will be critical. Additionally I've avoided drawing in channels on this crazy commodity but they're beginning to appear.

Silver: SLV
Presented without comment.

Soy Bean: SOYB
This has been another frustrating commodity to watch because I'm having a really hard time deciding which channel is in control.

Sugar: SGG
I long suspected that after the first breakout from the inner triangle it would bounce off the upper resistance line of the outer triangle. Please be aware that I think the next tap will be a breakout, but in the meantime SGG will be retracing.

Uranium: URA
Presented without comment

Wheat: WEAT
Is a further decline possible? Absolutely, especially when one considers the weekly chart. The current resistance is holding, but just barely.

Jakob Richardson © 2014