Sunday, July 20, 2014

Weekend Commodities Report: Commentary Update

Agriculture: DBADBA finally bottomed and was showing some serious oversold conditions. I indicated it was a "buy" when it contacted the resistance line shown at $26.00 and indicators are showing upward movement. Let's see it reach $26.80 before we turn pessimistic on it again.

Aluminum: JJU
I've indicated a "sell" on JJU after contact was made at the uppermost resistance line and this recommendation stands. The last two sessions breached this without closing above it so the trend remains intact. My recommendation stands.

Coal: KOL
The downward red channel is still in charge as KOL makes a series of lower highs.

Coffee: JO
JO has been frustrating to follow as its movement has been erratic and discontinuous. Contact has been made with the uppermost band of its current declining channel. Furthermore signs of life are appearing on the indicators. After filling the gap left from it's ascent at $30.75 I would list JO as a "buy." It may come down first to $31.50 before finally breaking out, however.

Commodities: DBC
DBC is an important ETF to watch as it is comprised of a basket of commodities and is an excellent indicator of the general health of the sector. I have previously called it's rises and falls quite presciently, except around June 13th. Having since broken down from its ascending blue channel a bearish period is indicated for this segment of the market. It has also contacted the lower resistance band of the red channel. I have indicated a "buy," albeit a "weak buy" as I forecast any ascent petering out at around $26.00. Thereafter I expect the downtrend to continue.

Copper: JJC
One can see that the red descending channel is firmly in control. Friday it contacted the lowermost resistance line after gaping down. This is not a happy development. If momentum continues it may break at around $38.50. The current channel is too narrow for it to be an independent descending channel so it may widen while trying to fill the gap it just created. "Sell" recommendation continues. With only two taps on the lowermost resistance line of the blue channel however, I wouldn't expect a break to happen.

Corn: CORN
CORN has been getting pummeled after recent Department of Agriculture reports showing a surplus and no ill effect after a wet spring. I previously indicated a proposed bottom shown by the blue line which has been moved down just a touch, but from here (because CORN is very oversold) we can confidently expect a bounce to around $28.50. CORN is listed as a "buy" with strong long-term potential. The massive downward channel is firmly in control, but we can expect a bottom to be created somewhere at some point. It's possible that this is the point where we begin to see horizontal oscillation in about a $5.00 range. We will continue to monitor and update appropriately. 

Cotton: BAL
Similarily to CORN, BAL has also been pummeled. I've called a "buy" for many of the same reasons the most important of which is that BAL is deeply oversold. BAL also has strong long term potential.

Crude Oil: USO
I week ago I called a "buy" on crude before it bounced convincingly off of an intermediate resistance line and my recommendation holds. You should notice USO is spending an inordinate amount of time in the upper half of the current channel rather than the lower half. This ascending blue channel has a long way to go!

Gold: GLD
I'm bearish on precious metals (PALL and PPLT excluded). The speculators have ruined a perfectly good trend for the rest of us so I don't really care what the technicals are showing. Predictably the commercial positions will short and clear everyone out. There's also a whiff of deflation in the air so GLD is not much use to anyone at this point, especially with the American dollar beginning to show a bit of strength and resource currencies like the Australian and Canadian dollar showing weakness. I expect this downtrend to continue (in what appears more and more to be a descending triangle, also bearish).

Lithium: LIT
I had to redraw LIT. It seems to be the odd one out of commodities at the moment since the element itself is in such demand. I'm listing it as a "buy." Apologies for the incorrect channels a week ago but LIT is looking pretty happy. Let's see what happens when it gets to $14.42 to $14.70. I think all that has happened is that the larger blue ascending channel is being widened which means a breakdown less likely in the medium term and can now push higher. It's a taken a while to get a handle on LIT but I think a clearer picture has finally emerged.

Livestock: COW
COW still looks like a "sell/short."

Natural Gas: UNG
An-almost-disastrous "buy" was revoked earlier in the week and not a moment too soon as the day the call was made UNG would go on to fall 4.20% at it's lowest point. UNG is not normally this frustrating which is why I like putting all my eggs in its basket, but it broke through an important intermediate resistance only to come to rest at around $24.50, all the while having indicators such as the PPO and the MACD histogram showing that some upward momentum was taking place with a possible change in direction. Its resting point is quite significant as it is currently filling a gap made back earlier in the year. Maybe this is where the bounce I have been expecting will take place (I do have a nasty habit of predicting them a little early). RSI is showing oversold conditions, so why not? I maintain that a "buy" opportunity is at hand but I am not 100% where exactly it is.

Palladium: PALL
"Sell" signal remains for PALL.

Platinum: PPLT
"Sell" signal remains for PPLT. Ascending triangle present, though, so be careful because this will breakout at some point. Currently found resistance due to a gap down back in September 2013.

Silver: SLV
See above for GLD.

Soy Bean: SOYB
"Buy" signal holds but I don't have enough data to create a channel yet.

Sugar: SGG
"Buy" signal still holds. SGG seems to have firmed at around $51.00.

Uranium: URA
I think I'm being a little adventurous releasing a "buy" signal on URA but it continues to edge up in what appears to be a little ascending triangle. I really want to see it break out above $15.10 before I begin to get excited, so let's watch it closely.

Wheat: WEAT
My previously issued "buy" signal still stands after resistance was made at $12.40 (sorry again about the two shitty signals issued back in June). I am much more confident a bottom has been found, so this is a "long-term buy". Let's see if this moves horizontally before turning back down or if a bottom is formed with a pivot upwards.




Jakob Richardson © 2014

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