Expert technical analysis of financial markets by JC Parets
by Ian Culley
From the Desk of Ian Culley @IanCulley
It doesn’t matter where you look: Commodities are digging in, finding support, and reclaiming key levels.
Grains, softs, base metals, and energy have all stopped going down. Even gold is bouncing off critical levels of former support.
But it’s not just the fact the commodity correction is hitting the pause button that’s important.
It’s where it’s happening.
Let’s take a look at a few charts. [Read more…]
by Ian Culley
From the Desk of Ian Culley @IanCulley
Energy futures are beginning to crack under pressure.
Crude oil and gasoline are breaking down to their lowest levels since February. And heating oil isn’t far behind, as it’s challenging the lower bounds of a similar distribution pattern.
It appears that the bears have finally come for energy.
Since we already laid out our short idea for crude oil futures in a recent post, today, our focus is on the energy sector and the implications these breakdowns carry for energy-related stocks.
by Ian Culley
From the Desk of Ian Culley @IanCulley
The past two years of sideways chop on the gold chart has been a game of perseverance and pain.
Gold is a honey badger, attacking a beehive face-first, digging for larvae, and somehow persevering through a thousand bee stings.
That can’t be fun, especially as other areas of the market have experienced explosive trends. But it works for the honey badger.
And it’s worked for gold.
Now that commodities and stocks have come under increased selling pressure, the data continues to mount in favor of declining gold prices.
Precious metals are looking weak. Gold stocks are breaking down on absolute and relative bases. And signs of risk appetite are nowhere to be seen.
But gold doesn’t care. [Read more…]
by Ian Culley
From the desk of Ian Culley @IanCulley
Commodities have been on the ropes for more than a month. As for commodity stocks, they’ve been under pressure since the start of Q2.
But the steep decline in these inflationary assets is beginning to slow – and it couldn’t happen at a more logical place.
The CRB Index and numerous bellwether commodity stocks are digging in and finding support at key levels. Whether these levels hold is anyone’s guess.
But the first step of the base building process is to stop going down.
Let’s take a look. [Read more…]
by Ian Culley
From the desk of Ian Culley @IanCulley
Sellers are in the driver’s seat when it comes to commodities these days.
Besides natural gas and livestock contracts, few commodities present buying opportunities that we like. In reality, most have either broken down or are on the verge of breaking down.
As the latest bout of selling pressure shows little signs of easing, we’re likely to experience more damage in the coming days and weeks.
Copper, one of the most economically sensitive and widely followed commodities in the world, is a great example of recent weakness. It can’t stop falling.
Given the downside volatility raw materials have experienced since the start of the summer, many trends are stretched. We don’t want to be too bearish here. We want to let the dust settle.
With that said, it’s hard not to imagine where the bears will strike next.
And when we scroll through our charts, it looks like they have crude oil in their sights.
Let’s take a look. [Read more…]
by Ian Culley
From the desk of Ian Culley @IanCulley
Don’t let the numbers fool you.
Despite positive returns at the index level for Q2, commodities have been in full retreat for the past month or more. We broke the damage down in last week’s post.
However you want to slice it, commodities are under increased selling pressure. The strongest areas aren’t breaking out; they’re trying to hold support.
That’s simply how raw materials are performing in the current environment. Yet we’re still finding levels we want to trade against from the long side.
Believe it or not, one of these situations is popping up in one of our favorite energy contracts…
From the desk of Steven Strazza @Sstrazza and Ian Culley @Ianculley
So far, 2022 has been a historic year. That theme intensified during the second quarter, which is now in the books.
The bond market is working on one of its worst years on record. The S&P 500 just posted its worst quarterly return since 1970 with the index down more than 16% from January through March.
Bitcoin finished the quarter with its second-worst return in its short history. And now the energy sector – the market’s leader this year – just posted its third-worst monthly return since the 1990s.
The operative words here are “worst” and “return.”
That’s 2022 in a nutshell. The bears are in complete control.
However, one area that has held up through all this is commodities. It was the best-performing asset class in 2021, and it’s the only one to close the first half of 2022 in the green.
Let’s note that the first quarter of 2022 was far different from the second. And before we go running to commodities for safety, let’s put the group’s recent performance in perspective. [Read more…]
by Ian Culley
Dr. Copper is in the hot seat again this week!
I know we just covered copper and the copper/gold ratio. But this is a major development, so let’s dive in a little deeper.
When one of the most important procyclical assets breaks to fresh 52-week lows, it takes center stage. It also has major implications across a variety of markets.
But what about energy? What about grains and softs and the rest of the commodity space?
Well, most of those contracts have already been in correction mode.
And, based on the recent selloff in energy and other commodity-related stocks, a much deeper correction could be in store for these raw materials.
It’s definitely something we’re monitoring. And that’s where copper and today’s chart in focus come into play.
Let’s take a look. [Read more…]
