The weekly chart – above- of the CRB commodity index has broken its 3+ year downtrend. It’s above its 200 day MA, and has shown strong comparative relative strength vs. both the S&P 500 (second from bottom pane) and the TSX (not shown). Shorter termed momentum studies suggest an overbought condition, the longer termed / lagging oscillator MACD is looking healthy (bottom pane).
Leading the charge have been oil, natural gas and precious metals gold & silver. Energy has just entered its seasonal strongest period of the year. Curiously, copper continues its underperformance, having broken down from a large symmetrical triangle about a year ago. Its forming an ascending triangle right now, and it’s too early to predict where that might lead to. While a larger cycle on commodities (see my bloghttps://www.valuetrend.ca/?p=672 ) may put future pressure on the broader CRB trade, it’s obvious that the current picture has become at least near-termed bullish for the broad commodity markets.
6 Comments
Hi Keith
You mention CRB broke through the 200 day MA, how important is that compared to the 50 day MA crossing through the 200 day MA as a possible buying signal. I know it will break the 200 day MA before the 50 day MA but is the 50/200 cross a better “Buy” signal in association with MACD and RSI?
I don’t consider myself an amateur “technician” but I often see many using the Money Flow Index with or instead of RSI. From what I understand MFI uses volume and price, what are your thoughts on the MFI chart as and indicator for Buy/Sell decisions?
Thanks again for all your charts and ideas.
Hi Daryn
I use MFI all the time–but its not available on the CRB
As far as the 50 going through the 200, also known as the “golden cross”–its not something I pay much attention to. I mainly use the 200 day as a trend indicator with some limited acknowledgement of the 50 day, and especially like to see a rising slope on that 200 day MA.
RSI is all about momentum–its a very different animal to a MA. Its more about overbought/oversold rather than trend identification. Read my book Sideways for more info on that.
MACD is a momentum indicator with a twist–and that twist is that its made up of MA’s! So it kind of combines trend with momentum. Its a slow moving indicator, but a great sign of identifying “the real deal” to avoid getting whipsawed by temporary RSI or stochastics signals.
Hope that helps
Hi Keith
Thanks for your detailed answer. I will look for your book or order it online this weekend. Your new bank posting has more charts I need to understand more.
Thanks again for all your postings and answers, greatly appreciated.
Daryn
Hi Kieth, I have both of your books and I really liked them and this blog as well. One thing you mentioned, though a while back maybe in the Digest, that you didn’t believe the gold banks were manipulating the price. I respectfully disagreed with that, because of the evidence that Mr Embry and others presented in the Digest as well. I thought you might look at the article @Bloomberg today Feb. 28, about others in authority might investigate the price fixing they see evidence on the exchange, right around 3:00 PM, just as Mr Sprott & Rich Rule et al have been talking about for years.
Whenever there was arise in price there were massive short positions being put on and there are still quite a few shorts that one expert says it would take a month of a short squeeze to close them out.It is going to China by the boatload.
Thanks Timothy
My ID article was mainly written to get people off of their “theme and thesis” horses, and start thinking like a trader. For example–look at my blog this week, where I say that money is rotating into commodities. You see–I am allowed to change my mind from bearish to bullish IF and only IF the evidence from the chart tells me to go long. Frankly, gold may be manipulated. Who cares??? If its being manipulated to the downside –sell short. If its manipulated up—wait for it—buy it!!! To stick to some theme that “I must own gold because some day, it simply has to go up and evil bankers are messing with it” is a very expensive mistake when the price is falling. Don’t try to fight big bank money with your little pile of savings. We can buy at any time. You don’t have to destroy your wealth while you wait to be right. Are we in this game to make money, or to feel “right”? I’m here to make money. So I’ll buy or sell anything based on the charts. Manipulated or not–I could care a less. Up is good, down is bad in my world.
That’s my rant for the day.
BTW–I’m on BNN MarketCall on March 11th–phone in and pin me with this question!! I’d love to answer that one live and in Technicolor.
Keith, Your response regarding the manipulation of gold is spot on. If a person looks at Sprott’s hedge fund I think it’s down something like 70% since this bull market run started…not good for any investors that have been in it. Thanks for all of your excellent work and sharing it with those of us that follow you.