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October 2022 Editors Comments

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Special Historical Reports

MRCI publishes a new round of volumes in its series of special reports each year.

Hottest off the press:

Historical Forex:  this 230-page volume contains seasonal analysis for AD, BP, CD, DX, EU, JY, MP, NE, and SF; with seasonal patterns and weekly charts for each delivery month and several intermarket spreads; complete with 236 seasonal and spread strategies for year-round trading ideas.

Recently published:

Historical Energy:  this 282-page volume contains seasonal analusis for crude oil, heating oil, gasoline, and natural gas; with seasonal patterns and weekly charts for each delivery month and several spreads; includes product, 3/2/1, and 2/1/1 crush spreads; complete with 190 seasonal and spread strategies.

 

Physical Commodities

Bullish or bearish?

Did commodities peak, or are they correctingt?  Inflation, recession, or stagflation?  (Two of those three involve inflation.)

Again, after making a multi-decade low in 2020 near 101, the CRB rose to as high as 329 in mid June 2022.  But, unable to sustain the trend, and at least in part due to the FED beginning to raise interest rates, the Index began a correction s or a downtrend.

By mid July it had fallen to 273, just above its 200-day moving average, whereupon it began to rally again.  By the end of August, it had reached almost 302 retracing just more than half its decline.  But it ended the month with a sharp drop as a monthly Employment report prior to a FED meeting approached.

Higher interest rates tend to curtail demand for crude oil and its products, copper, etc.  But what about supply?  Just a couple of weeks
prior to corn and soybean harvest beginning, prices have not been falling.   How much will yields for corn, wheat, and soybeans be reduced?  Is drier weather worsening or are the last couple years an anomaly?  Has drier weather become a structural factor in food inflation?

And what about the US dollar?

What can you do but ...

Trade 'em,

Jerry Toepke

 

Last Updated on Thursday, 01 September 2022 08:56
 

September 2022 Editors Comments

E-mail Print

Special Historical Reports

MRCI publishes a new round of volumes in its series of special reports each year.

Hottest off the press:

Historical Energy: this 282-page volume contains seasonal analysis for crude oil, heating oil, gasoline, and natural gas; with seasonal patterns and weekly charts for each delivery month and several spreads; includes product, 3/2/1, and 2/1/1 crush spreads; complete with 190 seasonal and spread strategies.

Historical Softs: this 154-page volume contains seasonal analysis of cocoa, coffee, cotton, orange juice, sugar, and rice; with seasonal patterns and weekly charts for each delivery month and several spreads; best of all, 84 seasonal and spread strategies.


Physical Commodities

Now it gets difficult.  Again, the CRB Index soared from its pandemic low in April 2020 at 101 up to its recovery high in June 2022 at 329.  And then it declined hard into July to a low of 273.  But it found support in mid July, with a low of 273, before turning back up to close on its July high at 292 just above the June close of 291.  A legitimate reversal?

So, is that the just start of an upward correction?  From its July low, it has retraced 33% back up.  Can it rise farther and, if so, how much?  The question is important, not just for traders but producers and consumers.  For example, do corn, wheat, and soybean producers rush to sell their crops?  Wait for a further bounce?  Store, hold, and hope for a new leg up in price?

The CRB itself will likely chop up and down for a while before tipping its hand as to the next big move.  Inflation?  Recession?  Both?

The US dollar took a beating while the FED made its last rate hike - even as bonds and gold rallied!

The dollar started August oversold and still above its 50-dma.  All markets, stocks and commodities, forex and interest rates, will remain volatile as markets try to figure out the world.

What can you do but ...


Trade 'em,


Jerry Toepke



Last Updated on Monday, 01 August 2022 10:18
 

August 2022 Editors Comments

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Physical Commodities

Inflation and/or recession?

As represented by the CRB or commodity indices, such as CRB BLS Commodity Index on page 68, have commodities made a final top?  Or are they correcting?

After making an all-time high in July 2008 at 472 (rounded-off), the CRB fell to a multi-decade low of 101 in April 2020.  But in June 2022 just 26 months later, it traded up to 330.  (Skeptics take note:  At 61.5%, that was almost the primary Fibonacci retracement of 61.8%.)

The CRB then closed lower 10 of the last 13 days of June.  It easily sliced down through the 50-dma to close at 291--- generating an outside monthly bar.  It has gotten oversold on daily indicators, but weeklies are just beginning to point lower.

So now what?  Corn and soybeans typically peak in June/July abd decline into harvest.  Wheat can bounce but then comes spring wheat harvest in August.  Natural gas normally heads lower.  Gasoline consumption peaks by August but heating oil consumption is least.  Copper and lumber collapsed just as construction season began.  But notice silver, the August monthly highlight, closed the gap visible (at $20) on the weekly chart on July 1.

Is talk of inflation giving way to talk of recession?  Months/weeks of pressure or consolidation before ?

What can you do but ...

Trade 'em,

Jerry Toepke

Last Updated on Tuesday, 05 July 2022 06:40
 

April 2022 Editors Comments

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Physical Commodities

Wow!  Inflation!  And then war!  No wonder commodities have taken off.

Remember that the CRB Index made a multi-decade low in April 2020 at 101.48.  It ended February 2022 at its highest since then 269.07.  The uptrend has progressed  steadily and persistently, with little correction along the way.  Yes, it is overbought on both daily and weekly RSI and has been for a few weeks.  The current level is already more than 40% back from its 2020 low to the all-time high at about 474.

But now the FED, whom everybody assumed was going to cool inflation with just a few rate hikes, is caught in a vise.  Inflation keeps rising, but, with the war, can it hike as much as it might think otherwise necessary?  Will too much destabilize too many financial markets?  If it doesn't hike enough, will inflation accelerate?

Crude traded at $100, Brent at $105.  Corn ($7.1875) and soybeans ($17.65) have left limit trades that are now targets.  Gold traded up to $1976.  All backed off right away but just as quickly rose again.

And corn soybeans, and cotton are not even planted yet.  Bonds can't decide what to do up 2~00 and 2~00.  And what about the dollar?

What can you do but ...

Trade 'em,

Jerry Toepke



 

March 2022 Editors Comments

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Physical Commodities

Non-transitory inflation but overbought CRB?

Like a compressed spring, a multi-decade low in the CRB in April 2020
at 101.48 released its energy to a high and close on January 31, 2022
at 255.12.

(Readers of the monthly hardcopy report can see how dynamic the move
on page 68.  The low is not as severe as in the old CRB for futures,
but you can see it has now made a +30-year high.)

Now what?  With the CRB overbought, one might expect a bit larger
correction than any during January, perhaps more in line with ---  or
even bigger than --- that in November/December.  There may be an interest
rate hike in March, and the FED said it was going to taper its mortgage
purchases.  All meant to tighten liquidity.

But there are rocks and there are hard places.  How will the stock
market and the economy react to too little or too much tightening?  Would
a war affect energy?

How about food prices?  South American
projections are already being lowered.  What if US weather does not
cooperate this growing season?  In the Futures Highlight, did
soyoil break out of a massive bull flag on the weekly chart?

Are metals going to remain in a sideways range forever?  What will
the US dollar do?

What can you do but ...

Trade 'em,

Jerry Toepke



Last Updated on Sunday, 27 February 2022 14:29
 
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