Uptrend In Commodities

I do not write about commodities very often, but now they deserve our attention. After spending 2-3 years in bear market, many commodities have risen sharply since the start ot this year and are now in new bull markets. The GCC stock – that is the EFT that tracks the commodity complex – is more than 10% up since the beginning of the year. Last month we saw big upmoves in many agricultural commodities as well as in gold and silver. Now, not all commodities are in bull market. Base metals fore example are still lagging… but the overall picture has turned bullish.

What are the implications of this new uptrend in commodities? First, it is a sign that the inflation may be picking up. But that’s not guaranteed as sometimes the hgher commodity prices are not accompanied by high inflation rates. Second, it is worth noting that usually commodities are stronger in the final stages of the bull market in stocks. But again, that’s not something that we can count on. I believe that we should examine each market seperately and try to estimate its own trend. So, the most important message is that commodities as a whole are now in bull market. Honestly, that is something I didn’t expect at the start of this year, but that is what we have now. And as always, the best approach in the market (in my opinion) is to follow the flow – and in this case it is up for the commodity markets as a whole.

As you know, I mainly focus on gold and silver as I personally do not trade the other commodity markets. And gold and silver are in critical junctures now. They are both in uptrends on their daily charts but have reached levels where they can find strong resistance on the weekly charts. I think that we should pay close attention to the trend in gold stocks ETF (GDX) as well. As long as it is in uptrend, that will be a supporting sign for gold and silver. If gold stocks reverse lower, than I suspect the rally in gold and silver may end as well.

Trade with the Trend!

Alexander
http://www.Trendrecognition.com

Disclaimer: The services provided by Trend Recognition Ltd are intended for informational and educational purposes only. At no time will Trend Recognition make specific recommendations for any specific person, and at no time may a reader, caller or viewer be justified in inferring that any such advice is intended. The service is not a recommendation to buy or sell securities or an offer to buy or sell securities. The publishers of Trend Recognition website are not brokers or registered investment advisors and are not acting in any way to influence the purchase or sale of any security and/or its derivatives. You should not rely solely on the information provided on this site in trading.

Gold, GBP and U.S. stocks

Last week was very volatile in many markets. Let’s focus on the 3 markets that grab my full attention now.

First, GBP broke higher vs USD and negated the multi-year Contracting Triangle from Jan 2009 low that I had been following. Now, the trend is higher on weekly, daily and hourly charts and that suggests higher prices ahead. It is important to note that the market has alredy advanced a lot since the July 2013 low so it may need a pause or a pullback first. But overall, the trend is now higher as long as the prices hold abv 1.6250 level. What exactly is the wave pattern from the Jan 2009 low is too early to tell. Let’s wait until there is more clarity before attempting to label this move.

The other important move last week was in Gold and Silver. After consolidating with some downside pressure for months,  they broke higher last week. As result the trend in these metals is now higher on the daily chart. The upside may not be big if the long-term trend is still down (as I suspect). But in the Short-Term we have to give the benefit of the doubt to the buyers as long as the prices hold abv 1270 in Gold and 20.10 in Silver. In addition, gold stocks ETF – GDX also broke higher after completing a small base on the daily chart and that further supports the Near-Term bullish outlook for the metals.

And finally, the U.S. stock market rallied strongly from the early February low. Nasdaq 100 is already at new highs for the year and the trend on its daily chart looks really strong. S&P500 and DJIA however lag the move higher and are well below their January tops. While the current trend is higher, I still hold my view that important Short-to-Medium-Term tops have been formed in S&P500 and Dow. If that’s the case, these two indices will not exceed their January tops and will soon roll over. Let’s see if I am correct, or the bull market is still so strong that will once again lead to an upside breakout.

Trade with the Trend!

Alexander
http://www.Trendrecognition.com

Disclaimer: The services provided by Trend Recognition Ltd are intended for informational and educational purposes only. At no time will Trend Recognition make specific recommendations for any specific person, and at no time may a reader, caller or viewer be justified in inferring that any such advice is intended. The service is not a recommendation to buy or sell securities or an offer to buy or sell securities. The publishers of Trend Recognition website are not brokers or registered investment advisors and are not acting in any way to influence the purchase or sale of any security and/or its derivatives. You should not rely solely on the information provided on this site in trading.

Is Gold In Bear Or Bull Market ? (gold update)

Hello everyone,

Since I have not talked about gold for sometime, I’ve decided to write an article about its Medium-Term and Short-Term prospects. You can find on the link below: it discusses the trending conditions and what are the key levels that we should pay attention to.

http://www.trendrecognition.com/education/articles/222-is-gold-in-bear-or-bull-market-gold-update

I am travelling at the end of this week and early next week for a short vacation at the beach. So, I will catch up with you in a couple of weeks. I hope you enjoy the last days of the summer.

Trade with the Trend!

Alexander
Trendrecognition.com

Disclaimer: The services provided by Trend Recognition Ltd are intended for informational and educational purposes only. At no time will Trend Recognition make specific recommendations for any specific person, and at no time may a reader, caller or viewer be justified in inferring that any such advice is intended. The service is not a recommendation to buy or sell securities or an offer to buy or sell securities. The publishers of Trend Recognition website are not brokers or registered investment advisors and are not acting in any way to influence the purchase or sale of any security and/or its derivatives. You should not rely solely on the information provided on this site in trading.

 

Update on Gold

Today’s topic is gold.

I do not cover gold on my web site and I only post a few opinions on twitter (if you want to follow me on twitter, go to: https://twitter.com/trendrecogn ). But recently that has been one of the markets that has taken my full attention. Why? Because after spending several months in sideways mode between 1520 and 1640, gold broke higher last week. And it has advanced pretty well since then. The breakout was confirmed by a similar breakout in silver, which is another positive sign.

Now, if you go to the weekly chart of gold, you will see that the longer-term uptrend has remained intact despite the prolong consolidation for the past year or so. The prices have held nicely above the 100-week moving average and have held above the 1520 support level. I’ve actually discussed this with you already. If you go back to the following link, you will find my article from early July explaining exactly that:

http://www.trendrecognition.com/education/articles/192-will-the-long-term-uptrend-in-gold-resume

With last week’s breakout we have a positive signal. Now, the question is what’s next. I am of a opinion that we are going to see a re-test on the last year’s top near 1900 and most likely a final speculative run to $2000/ounce. If that occurs, it is likely that “everyone” will turn bullish. That’s exactly how the bull markets end in commodities and I expect a long-term top here as well – but not now – maybe in the first quarter of next year.

Of course, this bullish view is valid as long as the market holds abv the last week’s breakout level (1620-40) and above the key long-term support at 1520. The pattern is such that a move below 1520 will signal that a Long-Term top has already been found instead.

Trade With The Trend!

Alexander
Trendrecognition.com

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Disclaimer: The services provided by Trend Recognition Ltd are intended for informational and educational purposes only. At no time will Trend Recognition make specific recommendations for any specific person, and at no time may a reader, caller or viewer be justified in inferring that any such advice is intended. The service is not a recommendation to buy or sell securities or an offer to buy or sell securities. The publishers of Trend Recognition website are not brokers or registered investment advisors and are not acting in any way to influence the purchase or sale of any security and/or its derivatives. You should not rely solely on the information provided on this site in trading. See the full disclaimer here.

Markets breaking down

Last week I talked about the fact that some commodity markets had been trading sideways for some time and were ready to break up or down soon. The most important development last week was the breakdown in crude oil. Crude slid through the 97.50 and 95.50 support levels and declined sharply. This breakdown is very important and may carry large negative signals for the broad stock market too. The history shows that usually the commodity stocks are the last to rally in a bull market. And indeed, the oil stocks (in particular) have been the leading sector since the fall of last year to this year’s top in early May. However we can now confidently say that both crude oil and oil stocks have already peaked and are now in downtrend. If the history is any guide, this is not good for the broad stock market.

From the other markets that I talked about last week, gold and silver have remained stable. The price chart of gold is acually bullish to me, but the recent consolidation in silver still looks more like a bearish triangle than anything else. Still, it is best to wait for the market to speak out. A move below 34.50 will be a negative sign for silver, while a break above 39.0 will be a positive event. Gold has been much more stable and actually has a nice looking daily chart. But what bothers me is the fact that gold stocks (GDX) have broken below all potential support levels and are now firmly below their long-termmoving averages. That seems to be a negative sign for the broader market too.

Now despite all these concerns there is a good chance to see a strong tradable rally in S&P500 in July as the sentiment has become too bearish. And even if my Short-Term wave count in S&P500 is wrong (take a look at our Short-Term update on our web site), the market is ripe for some kind of a recovery due to the heavy oversold conditions. Before that happens though I expect to see further selling  toward 1220/10 area. If other commodities (silver for example) break down as this downmove in S&P500 unfolds, the Short-Term picture may become more bearish, but again, even in this case I would expect a corrective oversold bounce to take place in July.

Alexander Nikolov
Disclaimer: The services provided by Trend Recognition Ltd are intended for informational and educational purposes only. At no time will Trend Recognition make specific recommendations for any specific person, and at no time may a reader, caller or viewer be justified in inferring that any such advice is intended. The service is not a recommendation to buy or sell securities or an offer to buy or sell securities. The publishers of Trend Recognition website are not brokers or registered investment advisors and are not acting in any way to influence the purchase or sale of any security and/or its derivatives. You should not rely solely on the information provided on this site in trading. See the full disclaimer here.

Focus on commodities markets

 The S&P500 and Nasdaq 100 failed to break above the important resistance levels at 1345 and 2375 respectively and have declined sharply since then. Now, they are eyeing on the March lows near 1250 in S&P500 and 2185 in Nasdaq 100. These markets are heavily oversold on 60-min chart but some further selling is still likely to be seen. My best guess right now is that the markets will break briefly (for a few days) below their March lows and will then turn higher in what appears to be a broad sideways consolidation from the Feb 2011 top. Those of you that are interested in the wave structure, can take a look at the wave structure that I am currently working – the pattern is still not well defined, but further sideways trading for several months is expected:
http://www.trendrecognition.com/us-stock-indices/short-term-outlook/sap500

http://www.trendrecognition.com/us-stock-indices/short-term-outlook/nasdaq-100

Now, with the U.S. stock market down (and it is down a lot, so probably it is late to consider a strategic short position here), my focus is on commodities which present some clear patterns. For example, crude oil is in a sideways consolidation that has most likely developed into a triangle. If correct, a move above 103.50 will be a bullish signal, while a move below 95.50 – a bearish signal. A similar pattern can be seen in the daily chart of silver: it declined sharply in early May and then has spent more than a month in sideways consolidation. The important levels here appear to be 33$ on the downside and 39$ on the upside (quite a large range, ah! – a smaller support level lies near 35.0, but I am not sure a break there will be a reliable sell signal). Right now, much more bullish look the markets in gold and some grains futures but the picture can change rather quickly. Probably right now is difficult to trade all these markets with leverage, but in a few days there may be some better low-risk entry points. Of course, if you trade cash products (like ETFs) you can probably allow to trade with larger stops.

And finally, I think EURUSD has started its next leg lower within the correction that started in early May this year. If I am correct, a decline twd 1.3720/1.3520 seems likely. A move above 1.46 will negate this outlook.

Alexander Nikolov

Disclaimer: The services provided by Trend Recognition Ltd are intended for informational and educational purposes only. At no time will Trend Recognition make specific recommendations for any specific person, and at no time may a reader, caller or viewer be justified in inferring that any such advice is intended. The service is not a recommendation to buy or sell securities or an offer to buy or sell securities. The publishers of Trend Recognition website are not brokers or registered investment advisors and are not acting in any way to influence the purchase or sale of any security and/or its derivatives. You should not rely solely on the information provided on this site in trading. See the full disclaimer here.