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February 2016 Editors Comments

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Physical Commodities


Well, the CRB Index did it again - after trying to yet again to stabilize, it plunged instead.  The venerable Index (to see it, go to stockcharts.com click on "Free Charts" then in the box labeled "Create a SharpChart" type in $CRB), traded quietly for several days near 182.  But it was just another in a series of pauses.  Unable to rally even by 5 points, the Index began another cascade lower.  By mid December, it had traded as low as 170.

Remember that it traded 688 in 2011 down to 313 in June 2014 - down 55% in 3 years.  Then another 45% decline to 170 in only 18 months!

So, it ended 2015 trying again to form a bottom.  The low at 170 generated 3 more weeks of trading above that level but below 178.  It is grossly oversold not only on daily indicators but weekly.  Both are diverging.

So what will 2016 hold?  Surely the downside is limited - unless commodities such as oil and gold are going to 0.  There seems to be much potential for turmoil in the world - financial, economic, political, weather.  At these firesale prices for commodities, would you rather own something tangible or have a European bank hold you money at negative interest?

If the US dollar is only the least dirty shirt in the laundry, is it clean?

I don't know, but I for one would be ready to ...

Trade 'em,

Jerry Toepke
 

January 2016 Editors Comments

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Physical Commodities


Physical commodities in general continued their seemingly eternal (or infernal!) decline into and through November.  (You can see the chart of the CRB Index for yourself at stockcharts.com.  Once you get there, simply click on Free Charts and type in $CRB.)

But wait!  Technical indicators, such as the RSI and MACD on the weekly chart have been gently rising even as price has declined.  This so-called convergence suggests longer-term trends have been losing momentum.

And now the daily chart appears to be setting at least an intermediate bottom.  On November 23, it traded down to a new low for the move at 182.00 - the same low as traded in 1999 and 2001 in the CRB as it was then calculated.  It then bounced modestly during the holiday-shortened, light-volume week of US Thanksgiving before pulling back again on Friday and the last day of the month.,

But on December 1, it retested the low by trading at only 182.37 - and then reversing.  Is that it?  A decisive close of 187.00 or higher would seem to complete a +10-day, narrow-range low.  There would be a lot of work for it to do, but commodities can't go to 0?  Can they?

I don't know, but I for one would be ready to ...

Trade 'em,

Jerry Toepke
Last Updated on Tuesday, 05 January 2016 11:54
 

December 2015 Editors Comments

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Physical Commodities

Have commodity indices made a bottom?

The old CRB (found at stockcharts.com click on Free Charts, then type $CRB into the box for Create a SharpChart made a small double bottom just above 185 in August after a severe final liquidation(?) leg had created oversold conditions with divergences on weekly indicators.  Since then it has been stabilizing.

How?  Did metals make a major low in a seasonal low time frame?  Led by platinum, gold and silver tend to rally into the new year and beyond.  The industry has usually built inventories of copper from mid November into spring for the upcoming construction season.

Corn and soybeans typically enjoy a post-harvest rally, even when supplies are large.  Wheat tends to decline, but there are concerns over dry conditions in North America, Ukraine, and Russia.

Crude oil and its products appear to have made a low, despite continued media discussion of heavy supplies and global overproduction.  The nearly expired natural gas contract dropped briefly below $2 - and immediately reversed.  From a bottom?

In the face of debt and fear of deflation, central banks continue their "accommodative" monetary policies.  Will too much money ultimately win out?

I don't know, but I for one would be ready to ...

Trade 'em,

Jerry Toepke



Last Updated on Thursday, 12 November 2015 10:29
 

November 2015 Editors Comments

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There are those who may tire of watching the CRB Index of commodities.  It has, after all, been a long and dispiriting 4-year bear market since the all-time highs in 2011.  $1900 gold, $50 silver, $8 corn, $18 soybeans, $2 cotton, $3 coffee, $100 crude oil -  all seem long ago.

Now we hear of surplus supply, lack of demand, China's slowdown, deflation.  The head of the IMF speaks of years of low commodity prices ahead.  The FED is so concerned that it fears lifting interest rates from 0!  Central banks around the world print money and get only lower inflation.  Oh, the humanity!  Will commodities go to 0?

Or are we already at 0?

Euphoria at the top.  Despair at the bottom.

Follow the CRB Index at stockcharts.com.  Click on Free Charts and type in $CRB.

Why is it important?  If the CRB is in an uptrend, one's trading bias to most components would logically be bullish.  And vice-versa.  Even a seasonal trader needs to adjust.  If the overall trading environment is
bullish, seasonal lows will often appear earlier than normal, seasonal rallies may last longer, seasonal tops arrive late, and seasonal declines abort early.

I don't know, but I for one would be ready to ...

Trade 'em,

Jerry Toepke
Last Updated on Friday, 02 October 2015 09:02
 

October 2015 Editors Comments

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Physical Commodities

Last month your editor opined that, for physical commodities and the CRB Index (which can be found at stockcharts.com by following the link to Free Charts and then typing into the box $CRB), enough is enough!  And it was almost.

The CRB's decline had merely stalled briefly at that just above 200.  But, no, August forced commodities even lower, with the Index plunging to 185.13 in August and that from 233 just last May.  In the next two days, it posted another nearly identical low.

But then oh, my!  The last three days of August were spectacular for CRB bulls, sporting three marching soldiers in candlestick charting terms (opening on or near its low of the day, with a big wide range, and then closing on or near its high).  In doing so, it
posted an outside reversal week!

Apparently driving it were two of the most beaten down, in-the-news markets crude oil and copper, both of which also posted outside weekly reversals.  Now, were they simply painting the tape?  Was it simply a 10% correction (up to 202)?  Or do these old-fashioned chart formations still mean something in this day of algorithmic, computer-driven markets?

I don't know, but I for one would be ready to ...

Trade 'em,

Jerry Toepke

Last Updated on Wednesday, 02 September 2015 08:06
 
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