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March 2017 Editors Comments

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Physical Commodities


Although unable so far to break out decisively, the CRB Index (go to stockcharts.com, click on Free Charts, and enter $CRB) appears on a weekly time frame to be building out an inverted head-and-shoulders bottom.  If so, the head lies at 154.85 and the down-sloping neckline, drawn from the minor peak at 203.68 in October 2015 to that of 195.88 in June 2016, has already been breached.  The month of January closed at 192.04, and the first day of February closed at 194.34.  Has the market simply spent the last 9 weeks in an upward rounding  consolidation pattern?

If so, is it waiting for a catalyst?  What might that be?  US dollar weakness?  A stock market decline?  International incident?  Domestic unrest?

Supply seems to be everywhere.  Lots of corn, wheat, and soybeans.  Plenty of oil and natural gas.  How could prices for these commodiites go higher?  One might think that some macro-event would be required to drive prices much higher.  It will, of course, soon be planting time for corn and soybeans, although the Southern Hemisphere must get their harvests in.

Crude oil has held up well, and seasonal patterns suggest buying continues into spring ahead of the upcoming vacation and driving season.

Maybe we should be ready to ...

Trade 'em,

Jerry Toepke
Last Updated on Thursday, 02 March 2017 06:55
 

February 2017 Editors Comments

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Physical Commodities

Will 2017 be a happy new year for commodities?

Again, the CRB Index made its all-time high in 2011 at 688.  It then fell to 154.85 in January 2016 actually lower than the bottoms (near 183) in 1999-2001 that launched the bull market of 2001-2011.

The Index surged up into June to 195.88.  It has since traded sideways, hovering above the 50-week moving average (ma).  In doing so, it has slowly and gently been curling said average higher.  The Index closed the year 2016 at 192.51 generating a yearly reversal above the 2015 close at 176.27.  That left the CRB in bullish alignment, with price above the 50-day ma (188.26) which was above the 200-day ma (184.95).

Now what?  Known fundamentals seem bearish.  Though several major oil producers agreed to production limits, financial pressures may induce producers to cheat.  Further, price has approached levels at which US frackers could reopen some of their spigots.

World supplies of grains and soy are plentiful, and major producers and exporters are preparing to harvest enormous new supplies.  US producers may be right behind with massive planting intentions.  Cattle and hogs have bounced hard, but reports of plentiful supplies of pork and beef in cold storage may limit any upside.

Maybe we should be ready to ...

Trade 'em,

Jerry Toepke


Last Updated on Tuesday, 03 January 2017 12:56
 

January 2017 Editors Comments

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Physical Commodities

Are we at a generational inflection point?  Consider the following:

(1)  Is commodity inflation percolating?  The CRB Index ($CRB
at stockcharts.com) hit a multi-year low at 155 in February
2016, rose to 196 in June, and has since meandered sideways.  But
it has done so by crawling along the top of the 50-week moving average
(wma), which is now trying to curl upward.  The close on November
30 (189.31) was just below a potentially significant breakout point
(191.35) that could open the way to the 200-wma near 240 about
25% higher!  The Index is above the 50-day ma above the 200-day ma.

(2)  Did bonds make a multi-year top in July?  If so, that
would end a 35-year bull market?  If so, where will that money go?.

(3)  Are stocks making a multi-year high now?  Was the runup
after Trump's election a breakout or a blowoff?  If so, where will
that money go?

Crude oil ran up about $6.50/barrel in just 2 days.  Energy price
sensitivity?

And what about the US dollar?  Was that a breakout from  an almost
two-year consolidation pattern or a bull trap?

One might want to be ready to ...

Trade 'em,

Jerry Toepke


Last Updated on Sunday, 04 December 2016 11:08
 

December 2016 Editors Comments

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Traders want volatility?  They may get volatility!

Crude oil down more than $2 one day then gasoline (temporarily)
up more than 21.00 centsthe next.  Gold does nothing but hug its 200-day
moving average for the last 3 weeks of October then up $30 in
3 days.  The US$ drops 0.80 on the first day of November, the same
day OJ closed up 10.00 cents and soybeans down 20.00 cents.  Fats
and feeders trade limits a few times.

Instability?  Election uncertainty?

Or is something changing?  From deflationary fears toward at least
modest inflation?  China resurgent or ready for a credit crash?  India?  The
November 1 PMI for both countries was higher than anticipated.

The venerable CRB Index made a multi-year low in early 2016, rallied
into June, and has since traded sideways.  The 50-dma is above the
200-dma, with the index testing the 50-dma from above.  The weekly
index is crawling along the top of the 50-week ma.

Now what?  Even in normnal years, the US dollar has tended
to decline through year end.  Will the current environment exaggerate
that?  Even if not, how will markets react?  Are the precious metals
preparing to run again?  What about the stock market?  And bonds?

Perhaps we should be ready to ...

Trade 'em,

Jerry Toepke
 

November 2016 Editors Comments

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Is consolidation almost over?

After establishing a multi-year low in January/February this year (154.85 and 154,89), the venerable CRB Index (go to stockcharts.com, click on Free Charts, then type $CRB into the box for Create a Sharp Chart) rose to a high of 195.88 in June, fell to 176.,67 in August, and has since been coiling as it works around its 50-day and 200-day moving averages (ma). Prices and the two moving averages are in bullish alignment, with the closing price for September at 186.32, the 50-dma at 182.98, and the 200-dma at 177.95.

Metals are typically strong during the fourth quarter, with gold and gold jewelry normally in great demand from India, the West, and China for festivals, holidays, and celebrations. But platinum normally outperforms gold, silver follows into the new year, and copper is in accumulation for the next construction season. Corn and soybeans typically enjoy a post-harvest rally to one degree of another, sometimes through the remainder of the year. Wheat suffers.
Energies are usually strong during October but then falter into December. Meats are mixed, softs are mixed. But winter is coming, during which anything can happen. And the US dollar?

Perhaps we should be ready to ...

Trade 'em,

Jerry Toepke

Last Updated on Friday, 07 October 2016 07:53
 


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