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August 2014 Editor Comments

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Dow Jones-UBS Commodity Index

R.I.P. First, we lost the old CRB. Then we lost the Reuters-CRB. And now, as of June 30, we have lost the Dow Jones-UBS Commodity Index as an analytical tool. It left us, as is almost always the case with charts, with a mixed picture. In other words, bulls can make an argument but so can bears.

The bearish case assumes 2008 was the ultimate, secular peak. The weekly chart still does not prove the downtrend begun in 2008 (or 2011 in the CRB) is over because not even the more minor 2012 peak has been exceeded. Its last trade at 134.63 only barely off the low of 122. Further, the Index closed out by collapsing below its 50-day moving average. Two bearish head-and-shoulder formations are apparent.

The bullish case assumes the secular commodity bull begun 1999-2001 remains in effect. The recent double bottom at 122 was far above the low of 2009 at barely 100, and it drove higher out of that low and then blew through all major downtrend lines. Have the lows of 2009 and 2013 and the 2011 peak in between simply been a major correction? Will the US dollar break down?

What's a trader to do? Maybe be ready to...

Trade 'em,

Jerry Toepke

Last Updated on Thursday, 03 July 2014 05:25
 

July 2014 Editor Comments

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Dow Jones-UBS Commodity Index

In recent years, the Commodity Research Bureau quit calculating their eponymous commodity index. Now, as of the end of June, the Dow Jones-UBS Commodity Index will no longer be calculated. Will it be a contrary indicator?

Again, after commodities peaked as a sector in 2011, the index fell (retraced?) into November 2013 to a low of 120.00. After bouncing for a few weeks, it returned to retest that low and held 122.22. The recovery since carried into April to as high as 138.67. In the process, the 50-day moving average (MA) rose over the 200-day the so-called bullish Golden Cross.

But the index was overbought and indicators diverged. The decline since has been orderly and, going into June, was trading below 134.00 but approaching support at the late-March low of 132.68. It was below its 50-day MA but above its rising 200-day near 130 which would coincide with a 50% retracement.

What could give it support or provide resistance? Will gold and silver soon establish major lows and rally? With physical supplies of corn and soybeans tight, how will their new crops be? Planted acreage is large and both crops are getting off to a good start. Will crude oil stay in a range of $100-105/barrel forever?

What's a trader to do? Maybe be ready to....

Trade 'em,

Jerry Toepke

Last Updated on Thursday, 05 June 2014 05:12
 

June 2014 Editor Comments

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Dow Jones-UBS Commodity Index

Uh-oh. Is it time for a correction ... downward? After making a double bottom at 122 in November and January, the Dow Jones-UBS Commodity Index featured on page 74 (daily/weekly charts updated daily at stockcharts.com; go to Free Charts and type in $DJAIG) rallied into the end of April to a high of 138.67.

But, on the last two days of April, it had the same high double top? and closed lower on the second. It then plunged on the first day of May to close below all trading in the last ten 10! days.

Worse yet, if that high holds, a couple of daily technical indicators show divergence. Now granted, price is still above the 50-day moving average (DMA) at 135.38 which is also above the 200 DMA. Given the distance price is from the 200 DMA, perhaps it needs to revert to its mean in a correction.

Nonetheless, unless it turns up immediately, as of May 1 that was one ugly chart. Grains and soybeans plunged as planting got underway for several crops and wheat harvest was set to begin. Gold and silver continued to erode. The US dollar held firm in spite of a reported increase in Q1 GDP of only 0.1%, which did not much help base metals.

What's a trader to do? Maybe be ready to....

Trade 'em.....

Jerry Toepke

Last Updated on Friday, 02 May 2014 04:56
 

May 2014 Editor Comments

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Dow Jones-UBS Commodity Index

Are commodities still in a secular bull market?

Charts of the Dow Jones-UBS Commodity Index suggest at least three potentially bullish clues:

(1) On a daily chart, the Index made a small double bottom at 122.00 in November '13 and then at 122.22 in January '14 both about 50 points off the high at 175 in 2011; going into those lows, movement had become less volatile, typical of lost interest and bottom activity.

(2) In February, the Index blew through the downtrend line that contained it since that high in 2011.

(3) By early March, with price already well above it, the 50-day moving average crossed over the 200-day in the so-called Golden Cross.

If that is a significant low, it is higher than the major low in 2009.  Does that suggest completion of a multi-year correction?  If so, is there potential for massive commodity inflation?

It has already shown up in cattle and hogs both at or near all-time highs.  Are grains and soybeans finished trading lower?  (Oats made an all-time high recently.)  What might happen to food prices if California's fertile valleys don't get water this summer?  Several of the softs
are jumpy.  What will metals do?

What's a trader to do?  Should he be ready to....

Trade 'em.....

Jerry Toepke


Last Updated on Friday, 02 May 2014 04:58
 

April 2014 Editor Comments

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MRCI's 2013 Hypothetical Results are now available!

MRCI's annual performance reviews in which are tabulated and plotted the hypothetical results of all strategies presented in 2013.  Strategies are broken down by complex,
with win/loss numbers and net profit/loss shown for each, along with cumulative totals.  Results are given for seasonal trades, seasonal spreads, and the Weekly Spread Commentary, as are hypothetical equity curves for each not only for 2013 but also since inception.

Dow Jones-UBS Commentary

Is a secular bull market in commodities resuming?  Has an approximately six-year cycle in commodity indices begun to rise?  See page 74 and lows in 1986, 1992, 1999, 2005, 2009, and maybe 2013-14.

The Dow Jones-UBS Commodity Index has surged through the downtrend line drawn through highs in 2011 and 2012.  Cattle and hogs are making new all-time highs.  Cocoa has trended up.  Have you looked at coffee?  Is that a multi-year bottom in sugar?  Soybeans are at multi-month highs.  Crude oil is above $100 and natural gas $5.00 despite huge new US supplies.  Downtrodden metals have been getting a bid.  Will erratic weather affect US crops?

What's a trader to do?  Should he be ready to....... 

Trade 'em,

Jerry Toepke


Last Updated on Wednesday, 26 March 2014 12:43
 
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