Here we go again.Great stuff here in the commodity space. I'm getting more bullish after looking at some long term data and comparing it to the current charts. I still think the market needs a rest. The $VIX has been on the low side of the 20 EMA for almost 10 weeks now. The SPX closed outside its Bollinger Bands Friday. Can it go on longer.... Absolutely. Can it stop here. Absolutely. But let's get ready for a bullish move higher by identifying some sectors that look poised to move and be ready. I would prefer to buy after the market pulls back.
One reason this blog today hones in on Commodities is that if the Euro zone and the US have to keep printing more money to create inflation, the commodities should get an awesome rally. Some would say the Eurozone isn't printing money, but they found $500B to liquify the banks should there be a sudden shock from Greece.
$SPTEN - Flirting with the 200 DMA
$COPPER - Flirting with the 200 DMA. Notice when $COPPER made it's big move it really outperformed the $SPX. This can be noted by the purple line surging from a downtrend to an uptrend. Copper recently tagged the 70 line on the RSI so I use that as a new bull market indicator.
$WTIC - Flirting with the 200 DMA. Crude...watch this one closely. It's looking weaker. But everything is at a support point. If this turns higher, I want to be in on this lift.
$CDW - Flirting with the 200 DMA
I didn't show the British pound but it is too. $XBP - Flirting with the 200 DMA
$TSX - Flirting with the 200 DMA
$DJUSTK - Flirting with the 200 DMA.The Transports have confirmed the DOW Industrials recent highs but they really lag compared to the May 2011 highs.
$GYX - Flirting with the 200 DMA..Industrial Metals. RSI made it to overbought so this says BULL MKT to me.
$GTX - Flirting with the 200 DMA - Goldman Sachs Commodity Index
$GJX - Flirting with the 200 DMA
$LUMBER - Flirting with the 200 DMA last wekk and it absolutely launched. Compare the $LUMBER chart below with the $GJX chart and the $WTIC chart up top.
Compare the Lumber and Copper charts. Notice how their breakouts looked just prior to the move higher. Well it looks to me like $WTIC, $GJX, $GTX are all similar to the patterns that copper and Lumber had.
I still think the market needs to pull back first. But I do want to have a solid shopping list for this as the market continues higher. Tomorrow we'll discuss how to find strong stocks using the SCTR.
Good Trading,
Greg Schnell, CMT
