Thursday, October 30, 2014

Commodities Report: Daily Charts ("...a whiff of deflation has returned, again...")

Some critical events have taken place on the charts the importance of which I fear is lost on most people. Recall over the weekend I kept harping on about "false bottoms" and "further breakdowns?" What happened to silver (SLV) today is a foreshadowing of what will happen (I expect) to most other commodities. The establishment of that first bounce after the sharp decline starting about ten days ago simply widened and continued the preexisting downward channel. This fall has only just started.

Peculiarly we are seeing the same pattern play out now with natural gas (UNG) albeit in a hugely reduced form largely because heating season begins in three weeks. A bounce occurred off of the lowermost resistance line putting it back in it's previous declining channel, but what I think this is setting up is another fall to about $18.60 and possibly beyond. The "false bottom" has been set at around $19.00.

SLV could be indicator of what will happen for other commodities that also produced this "false bottom" pattern meaning that the line I drew for them is just a step down on a very long staircase. 

The only area of commodities where we are not seeing this are the agricultural's. Some of them like CORN and WEAT had a bounce a few weeks ago and have enjoyed a strong ascent since then which hasn't broken. Others, like JO, may be making new patterns upwards and still others like SOYB have just started their new transitions to ascending patterns. COW still looks strong and has for a while.

Strong recommendations:
  • Short gold (GLD)
  • Short silver (SLV)
Agriculture: DBA

Aluminum: JJU

Coal: KOL

Coffee: JO

Commodities: DBC

Copper: JJC

Corn: CORN

Cotton: BAL

Crude Oil: USO

Gold: GLD

Lithium: LIT

Livestock: COW

Natural Gas: UNG

Palladium: PALL

Platinum: PPLT

Silver: SLV

Soy Bean: SOYB

Steel: SLX 

Sugar: SGG

Timber: CUT

Uranium: URA

Wheat: WEAT

Jakob Richardson © 2014