Saturday, May 31, 2014

Weekly Commodities Report: Part I

Agriculture Fund: DBA
With regards to DBA near term outlook looks like an imminent transition to a positive channel. Because this was recently put up, a "sell" would have normally been announced at the end of the first week of May.
  • TRIX and MACD have all be negative for the past week
  • Trending consistent with a sharp and narrow declining band
  • A foresee a pause in its decline next week as several solid areas of resistance are in place. Ascent back in February and March was observed with several gaps. Furthermore, extending a resistance line from the bottoms put into place in the last week of March and the first week of April means two lines will be met almost simultaneously.
  • PPO short term indicator is about to turn negative. Long term PPO however is positive and quite strong. A possible bounce off of the 'zero' line for the short term might take place in the region of the two resistance lines. 
  • A very strong fall in the next four trading sessions with a close will be required to negate the above scenario.

Aluminum: JJU
As a metal with such importance as an indicator of the health of the global economy, JJU continues to fluctuate in a large declining channel and has since last year. I think it would be reasonable to expect a tap on the upper limit at around $19.00.
  • Does JJU break out of the channel? A convincing case can be made. PPO short term indicator is going to turn positive for only the fourth time in a year and a half. A breakout to the upside may be coincident with the short PPO also turning positive
  • MACD histogram is also imminently going to turn positive.
  • A "buy" alert would have been issued in mid May.
  • Four previous taps have been seen on the upper limit already.
  • Transition may have already begun as denoted by the red lines.
  • This particular run may go to $19.75.

Coal: KOL
KOL has been in a bearish rising channel since February. I believe a breakdown is imminent.
  • Troublesome is that I am having problems finding possible sites of resistance. Previous peaks and troughs are not connecting.
  • A "sell" signal is being issued for KOL altough a previous "weak sell" would have normally been issued back in the second week of April.
  • MACD histogram has been in a gradual decline for some time now (around the second week of April in fact). Extended momentum declines usually gather steam which is why I feel a breakdown is imminent. 
  • With only three taps on the lower limit (I would like to see four, normally) we might have a small reprieve next week with a climb to $18.80 or $19.25 (more on why later) before it finally gives up.

Coffee: JO
A hit has been made (it's third) on the lowermost resistance line at $34.00 whereupon I expect the bounce to eventually continue. Please exercise patience and caution when making this purchase as a week may elapse before a break out occurs. An alternative scenario is a breakdown so be mindful and have your stops nice and tight. Macro sentiment is generally bearish and quite poor, but has been for over a year so I don't know what guidance this provides.
  • MACD histogram is still negative. Watch for a notice on the hourly charts to be sure.
  • MACD has not yet had a signal line crossover.
  • TRIX has crossed over but still in negative territory.
  • Short term PPO is bearish but long term PPO is still going strong, so this may just reflect the movement to the lowermost line of the channel.
  • This is a "weak buy."

Commodities Fund: DBC
Since DBC was only added this week, a sell signal probably would have been issued when the upper limit of the channel was contacted on the 3rd week of May. As it appears, DBC is quite unhappy at the moment. "Sell" remains in effect.
  • PPO short term is crossing downwards again the long term. Signal for the short term line is downwards
  • MACD histogram is negative with a signal line pointing downwards
  • MACD is also negative.
  • A lot can happen in four weeks so once contact is made with the red lower limit line at around $25.90 or so it may return moving towards the upper channel before contacting the blue lower limit line at $26.20.

Copper: JJC
JJC is listed as a "short." I do not expect movement above the $38.75. JJC should spend June crossing the various intermediate bands
  • TRIX has finished cresting and has had its signal lines cross over downwards
  • MACD/MACD histogram are both negative with signal lines that have also crossed over. 

Corn: CORN
Channel holds, narrow and steep. It remains listed as a "short." Resistance points will be coming into play so I expect pauses and movement into the top half of the channel while it continues its descent to about $30.70.

Cotton: BAL
BAL has been in a sharp narrow descending channel. I feel that contact will eventually be made the lowermost resistance line in the first week of June. Cotton is a "strong buy" at around $51.25. Two views have been presented in order to impress upon the long term strength of these resistance lines which go all the way back to 2012.
  • Contact should be made with the upper limit line of the blue descending channel at around $52.50 after-which a sharp steep decline should resume. 
  • All signal lines and indicators are still negative illustrating the remaining the dollar or so it has to fall, so please be patient. The blue "buy" arrow has been placed on the chart indicating roughly where we should be seeing our transition to an upward channel.
  • Please pay close attention to the hourly charts during the second week of June.

Crude Oil: USO
I issued a "short" on USO on thursday or friday (thick red arrow). My recommendation holds. Not a whole lot of data is available for this declining channel but USO has made some nice taps on the upper limit of the channel and then retraced approximately 50%.
  • MACD signal lines have not yet crossed over but appear to do so imminently. 
  • Slope of the short term PPO line has also just turned down negative.
  • MACD histogram has just turned negative.

Gold: GLD
GLD should have bee listed as a "short" starting the last week of May (the red arrow has been put in retrospectively). I'm not particularly gun-ho about precious metals in general. I maintain that our first site of major resistance for this sharp/steep channel is just below of $120.00. Throughout June it may retrace back up to around $120.80 and on again to $123.00 but a fall to between $116.00 to $115.00 in the medium term still seems like the surest bet at the moment. This "final resting place" of gold is related to a bottom put in back in late December and early July 2013.

Friday, May 30, 2014

Daily Commodities Report:

As always the daily charts will be reviewed over the weekend for all commodities. Since I have relaxed into a nice routine I will begin to put in "buy" and "sell" signals denoted with blue ("buy") and red ("sell") arrows on my charts. Some may be very modest and others will seem rather large in comparison. While I work out the bugs on my system they can be used as a guide for buying on the two-hourly and daily chart.

Coal: KOL

Copper: JJC

Crude Oil: USO

Gold: GLD

Lithium: LIT

Natural Gas: UNG

Palladium: PALL

Silver: SLV

Sugar: SGG

Uranium: URA

Daily Commodities Report: New Additions

Agriculture Fund: DBA
Apparently someone yesterday put a buy for 1 million eMini contracts on the market in one second, basically a billion dollars worth and this is what is responsible for elevating commodities (superbly reported on Zero Hedge, as usual). You can see the bounce on DBA which has helped its recent slide. It seems we have had a breakout and just in the nick of time too! As you can see we almost had two successive closes below our resistance line at about $27.60. DBA has also begun to close the gap when it opened on the 27th, so let's see if that can get closed on the open today. If it does, it should be a transition to a new channel with resistance at $28.40. Without yesterday's "event" I'm pretty sure I would have made a "sell" or "short" recommendation, but the bounce we've seen is similar to the one that appeared in JO (coffee) so I think we are in a "weak buy."

Aluminium: JJU
Some of you may become frustrated with the lack of data on an hourly basis for JJU, but unfortunately that's just the way it is. Let's do our best to make sense of it.

JJU also had a decline similar to DBA (agriculture) but preceded it by a few trading sessions because an upward channel formed after bouncing off the resistance put in on 24th of March. Daily chart will be reviewed this weekend to ascertain where this might be headed.

Commodities Fund: DBC
Probably the most important new addition to Danja Zown. Since the bottom put in on April 2nd (or thereabouts) and May 12th a resistance line had formed which was broken recently. I think DBC is moving in a bullish declining channel.

I don't know what to make it movement since May1st however. All I can say is that MACD, TRIX and PPO are moving upwards. Due to the liquidty of this security we can expect the channels to be much wider which is what I think we are seeing here. I think contact with the upper limits of the channel will be made at around $26.50. PPO is indicating bullishness with the 100 day EMA being greater than the 150 EMA. Short term PPO however is bearish (20 day EMA is less than the 50 EMA). I think the last few trading sessions represent a bottom in this small upward trend.

Cotton: BAL
BAL has also been in a declining channel since early May. Yesterday a push was made through several bands within the channel, however momentum indicated that the movement was not that big a deal. Several taps have been made on the second inner solid line plus BAL has spent most of the time in the upper half of the channel. I think the low put in just after the 27th was a great "buy." Let's look for contact with the solid lines at $53.19 to $53.50. A breakout may follow. Let's review the daily and weekly charts this weekend and make a more informed decision, but I think BAL is looking fantastic at this point.

Platinum: PPLT
PPLT also suffers from not having enough data, but unlike JJU we have fully formed bars. I think PPLT broke out around 13th of May by continuing its inclined channel. Troubling though is that near-term there was a breakdown. This should continue until to around $140.43, but if it fails to hold like SGG (sugar) did when it prematurely broke out we might see a slide to $136.50. Precious metals generally are not in a happy place right now so I'm inclined to the latter scenario.

Soy Beans: SOYB
SOYB has had an incline similar to PPAL (palladium) - long gradual incline without too many anomalous points outside a reasonably sized channel. My PPO long term indicator is uber-bullish with the short term PPO moving up (along with TRIX and MACD), albeit without a cross of the short term over the long term signals. Since we are on the bottom of the channel a weak "buy" might not be a bad idea. Long term charts will be reviewed this weekend to get a firmer idea of its trend.

Wheat: WEAT
Suspcious similarity here to URA (uranium) and LIT (lithium). Narrow declining channels, unusually so in-fact, arriving at a potential resistance and transition. RSI(5) indicates an iminient move up, and although MACD and TRIX could be a little more confidence inducing, I'm pretty sure we'll see a bounce off of $14.80 to $14.90. I'm issuing a "strong buy." Currently at $15.16 momentum hasn't crested yet to see the transition I'm imagining so further decline in very-near-term is likely.

Notice: Commodities ETF Coverage Increase

Because of the enthusiasm I've received for my commodities coverage I have decided to extend the number of commodities covered. Starting this morning I will begin to follow:
  • Wheat: WEAT
  • Agriculture Index: DBA
  • Platinum: PPLT
  • Commodities Index: DBC
  • Aluminum: JJU
  • Soy Beans: SOYB
The intention has always been to keep this website and information free. I am hoping to one day make some money from donations (I still have $300,000 in student debt) and advertisement revenue. I've never felt that monthly newsletters properly rewarded readers given their cost, but there are a few exceptions.
Because I'm having so much fun doing this, here is a photo of a little guy (below) my father found in our backyard in Collingwood, Ontario. Apparently 'Mum' likes the safety of our backyard and leaves him there while she spends the day foraging and returns to pick him up later in the day. Our neighbors have been religiously watching him to make sure nothing bad happens to the newest member of our neighborhood.
Since my father is a child of the 60's and I am currently reading "Fear and Loathing on the Campaign Trail," we've named him "Gonzo."

Thursday, May 29, 2014

Daily Commodities Report: Evening Edition

Coal: KOL
Looking at the hourly chart it might be difficult to see this continuing to decline, but two breaches were already made in the channel on the 27th. Turning our attention to the daily chart contact should be made with the lower band somewhere around $18.50 in the next few trading sessions.

Coffee: JO
Similarly JO has also been a little difficult to follow lately. I had to widen the channel a little to accommodate this morning's rise. On the daily chart JO has been trading nicely between $34.00 and $42.00. Some commentators, such as trading channels, think that this won't hold and I'd have to agree. Some time will be spent in this lower band before a break is made but it is hard to say where exactly it's going to go. Let's monitor closely over the next few days.

Copper: JJC
Nothing new to report on JJC since this morning.

Corn: CORN
Nothing new to report on CORN since this morning.

Crude Oil: USO
Nothing new to report on USO since this morning.

Gold: GLD
Nothing new to report on GLD since this morning.

Silver: SLV
Nothing new to report on SLV since this morning.

Lithium: LIT
Nothing new to report on LIT since this morning.

Natural Gas: UNG
UNG continues to 'crest' but is in a bit of an "over-bought" stage at this point. The channel has been heightened a bit to include this morning's open.

Palladium: PALL
Nothing special to report! The telegraph reported a day or two ago that strikes in South Africa are now entering their 18th week which looks very coincident with the incline we have been observing.

Sugar: SGG
Up 1.74% at the time of writing - I was expecting a little pause. In any event I'll take it!!

Uranium: URA
Is this a breakout? Two closes outside the band so I'd be inclined to say. Remember that I issued a "buy" on the 27th so I hope my readers have taken advantage. If this is the transition to a new channel it'll only be up!

Word of the Day: "Apathy"

   The movement in SLV (for me at least) is much terrifying that GLD. With GLD we have a series of well demarcated channels and lower resistance lines. GLD's movement hasn't been as dramatic as SLV's over the years. Early wild oscillations, particularly from the low in 2008 to it's high in the first half of 2011, means channel lines have to be moved further out. Furthermore, rapid accelerations in price breaks more traditional upward channels distorting prices future projections are made on (reference here is made mid-2010 to first half 2011). Where SLV is headed is difficult to say but one thing we can all agree on is 'down.'
   Easily one of the most irritating patterns in charting is a near-horizontal signal line on the MACD that often arises after a sharp ascent or descent. To compensate for the sudden change in momentum movement in these patterns is best described as "midling." I hate it and that's sort of where we find ourselves now with silver. Momentum tried to carry SLV prices up from July of last year to now but our declining channel (shown in weekly format) appears to continue with SLV having run out of steam.

   A very bearish indicator, Price Performance Oscillator (PPO), crossed the zero threshold around October of last year meaning exponential moving average of the last 150 weeks is greater than the last 100.
   SLV currently sits comfortably in the middle of the channel. The price I expect it to decline to around is $16.00 which is frightenly low considering it was almost three times greater than that three years ago. Looking at the channel I've drawn coupled with the peaks put in place back in 2008 and 2010, a bullish scenario would emerge if SLV hit $16.00 and then began slowly moving up towards the upper resistance bands. Alternatively, it could continue its slide into the $14.00 to $15.00 range (as you can see I'm having problems deciding where exactly) and then move up.
   I'm in favor of the former scenario. People seem genuinely enthusiastic about silver so sliding along $16.00 for some time before a break out seems reasonable. The caveat to this of course is that serious upward movement in SLV won't be seen until the first half of 2015.

Daily Commodities Report: Morning Edition

Because I didn't post anything yesterday (hungover) and some very interesting developments have taken place with my charts, I'll have two posts today! This is the morning edition followed by one later this evening. Whatever has been left out, major transitions must be taking place so rather than make a mistake with too little data, they've been omitted.

Copper: JJC
JJC is continuing its movement horizontally along the channel. Still hasn't hit the lower band but I do expect it to in the next few days around $38.40 to $38.20. My PPO indicator has moved down but I expect to put in a cross shortly.

Corn: CORN
CORN has almost completed the steep declining channel I've noted for the past few sessions. Its currently approaching a resistance line at $31.60. Furthermore, MACD and TRIX are showing some life so at the bell this morning this might actually break out. My histogram is too oversold to confidently recommend a "buy" because it might just be working off the negative momentum and continue down to $31.60.

Crude Oil: USO
USO has broken below $37.80. USO was looking so strong, I thought it could stay up and continue this channel but now a pause seems more likely. All indicators are quite negative. Very difficult to know if this will continue but we will see contact with the lower resistance line and then a pause followed by either a bounce or a break. Personally I'm in favor of the latter. USO has even broken it's moving averages on my RENKO chart. The pause will be important since yesterday's decline was fast and furious. "Pause" here means a modest retracement of yesterday's losses while moving with the lower resistance line before heading down.

Gold: GLD
The decline I've been forecasting has occurred and in full swing. In the near term a pause seems likely since narrow channels never last. I hope everyone has been able to take advantage with some "shorts" or put options. The decline will continue and this channel should widen today or tomorrow. A near term pause should happen at just below $120.00. Further in the intermediate to long term I see capitulation to around $116.00

Lithium: LIT
I think LIT can be best described as "cresting," which is to say after its transformation into a new channel some of the intermediate bands will be tested. I expect oscillation in this region near term.

Sugar: SGG
SGG has a bounce and a very good day yesterday. This will continue to trend upwards.