Sunday, August 03, 2014

Daily Charts: Commentary Update

Courtesy of Trading Channels (I do not have formal permission to be showing these because my login in the comments section didn't work for some reason) this week's review needs to be thought of in the context of the following two charts:

I went short on gold miners and long on natural gas (the latter of which I think will have very meager returns). The short on miners will need some more time before some valuable returns are seen. We are suddenly living in very interesting times. Because of the volatility in the market next week I will review the daily charts a little more often.

I've also noticed that since I have zoomed in on my charts to show a little less time that my arrows were not as accurately placed as they could have been. Lobbing a few months off the x-axis has made a huge difference. I apologize for this and going forward you should see better placement of arrows for the 'buy' and 'sell' signals. 

Agriculture: DBA
It looks as if my blue ascending channel has come to an end. Friday it broke down but in advance of solid downward technical signals. One scenario is that the blue ascending channel may widen and complete it's ascent to the larger red upper channel limit, or alternatively, the market is so depressed at the moment it's decided to turn down now. There's a lot of contact on the lower limit of the little blue ascending channel so hopefully your trailing stops got you out in time but it appears to be following the second scenario. I'm inclined to exercise caution now and list this as a "sell/short."

Aluminum: JJU
Initially I hadn't called JJU as a "sell/short" at $21.00 - I did so a little early and called it at $20.10. But then some economic data came out showing that demand in China was quite good for aluminum and the larger blue ascending channel got a new upper limit. There was a cluster of three points at $21.00 which made a great "sell/short" entry and we continue to see the results of that call. The steep narrow descent continues and doesn't look like it's letting up. Inner channel resistance points are shown but I don't feel like they'll amount to much. My "sell/short" signal continues.

Coal: KOL
KOL did the same as aluminum - a new high was put into place after it's breakdown from the ascending blue channel. I previously called the "buy" on July 21st very well but the peak was a little ambiguously placed (I still can't figure this one out, perhaps there was an effort to have it return to the ascending channel after Australia/India deal announcement last week). In any event our larger declining red channel now has a higher upper limit. I recently called KOL as a "sell/short" and this signal remains. 

Coffee: JO
The larger descending red channel is firmly in control. JO rapidly contacted the upper limit of the channel from a high put in back in April. Lower highs seem to be the over-whelming theme throughout these descriptions. Again, it looks set to descend but in anticipation of my indicators which are cresting at the moment. This is odd - my indicators and most of my calls are usually a little early but this week it appears to be the other way around and I am not sure what the significance is. Some retracement early in the week might take place while the indicators play catch up before moving downwards. I've placed a forward looking "sell/short" signal.

Commodities: DBC
Another apology is in order here as well - when DBC broke down from its smaller blue ascending channel in the last week of July and simultaneously tested the lowermost band of the larger descending red channel, an alert should have been posted about a possible greater breakdown. It looked perfectly positioned for a turn around but the agricultural and crude components of this ETF are what have dragged this lower. Look for resistance at $24.65, but this is going to remain a "short/sell" for some time. In the immediate term it is currently outside the bollinger bands so Monday might show a slight retracement followed by a continued fall. 

Copper: JJC
I called JJC as a sell once it it had gotten close to the intermediate blue resistance line. A "sell/short" is still listed as we have only witnessed a little relief from its overall decline. The current declining red channel is firmly in control. Look for resistance at between $38.50 and $38.75.

Corn: CORN
CORN continues it's cataclysmic fall on the heals of the best growing season since 1986. Last week (or perhaps the week before) I stated that this would likely continue to fall and it has. RSI is showing oversold conditions but there's no reason for this not to reach the lowermost channel resistance line (which is somewhere around $23.00 to $24.00).

Cotton: BAL
Ditto for BAL. I thought that a bottom was in place second week of July and then called a "sell/short" once that had broken. Further downward pressure is still evident. 

Crude Oil: USO
USO was a bit a puzzlement. It started an ascending blue channel back in mid-July, and looking very strong, and then abruptly turned about face. When the blue channel was broken a "sell/short" was issued and that still stands. Currently it sits outside the bollinger range so except a little relief rally tomorrow whereupon the fall will continue. No reason for this not to go to $35.00.

Gold: GLD
I'm playing with fire by shorting gold. So many (myself included) want this uncertainty to end. My channel identified back in early July has stood up rather well although I have had to augment it a little in that time. The slope of the channel is not so severe now meaning the decline is forecast to be more protracted and much more volatile. Two critical resistance points are arising fast. A higher low at about $122.00. A bounce off of this point will be quite bullish, and another resistance at around $120.00 (which would not be a higher low). I'm still listing GLD as a "sell/short," unchanged since the beginning of July. Additionally the chart for $GOLD by Trading Channels is provided below.

Lithium: LIT
LIT has broken down and was listed as a "short/sell" when the blue ascending channel failed. I don't have much data for this prospective channel so stay tuned for changes.

Livestock: COW
I've struggled with COW just as I have with USO and interestingly both have made identical movements, but for indeterminable reasons. COW appeared to be in a down channel but kept going wider and wider at which point I got fed up and changed it a blue ascending channel which has just been broken. I've listed it as a "sell/short" since Thursday but the original sell/short signal back in the second week of July has taken some very strange twists and turns. The significance may be that a major transition to a downward trend has started.

Natural Gas: UNG
Despite the fall in the markets my call on UNG has held up well, however despite the tight range it is trading in no profits have been seen yet. It has been a nail biting week! Natural gas stores are currently at their lowest levels in several years with prices expected to decline into October. My larger declining red channel has held up nicely and continues to do so provided this current bounce holds. Notice the similarity between this and DBC. DBC also had a larger declining channel that didn't hold up. It too bounced off a larger channel's lowermost resistance line and then declined sharply. Is it possible that UNG will do the same? Please keep very tight stops, but if the blue channel fails, "sell/short" immediately.

Palladium: PALL
No comment necessary.

Platinum: PPLT
No comment necessary. 

Silver: SLV
I wish GLD took it's decline more convincly like SLV has! This has created a GLD:SLV ratio which is bullish but has more to do I think with the fact that SLV is declining faster than GLD giving an overall impression of impending strength rather than immediate weakness (this is contrary to the position put forward convincingly by The Rabbit Hole). Individually neither of these looks good. Still a "short/sell."

Soy Bean: SOYB
Channel broke here as well on Friday. Listed as a "short/sell."

Sugar: SGG
On Monday I called SGG as a "short/sell" as resistance was being tested for what I thought we be the last time (initially the arrow for the decline was placed as a forward-looking descent). Currently it rests outside the Bollinger area so a relief or pause should be witnessed before it continues downwards. The support offered by the low back in January of this year has already been breached. Excellent "short" opportunity in the next trading day.

Uranium: URA
My little intermediate declining red channel has held nicely since a sell was issued in the last week of August. In the spirit of the times, why not continuing to fall? I have high expectations about URA finally making a turnaround after it was reported Japanese nuclear reactors were being turned back on and China was continuing its nuclear powerplant building binge courtesy of the French, but everything else in commodities looks so poorly. Once contact is made $14.50 a pause is likely to ensue with a decline back to about $14.00 at which point we buy again! 

Wheat: WEAT
Maybe this is what the new channel looks like???

Jakob Richardson © 2014