There are a few commodity plays worth looking at for potential trading opportunities right now. Investors can consider equities (aka individual producers)– or direct commodities exposure ETF’s – for these trades. Let’s get right down to business and look at some charts that should be on your watch list:
I noted on a recent blog that Nat Gas is setting up for a potential move. Here is the full write-up. I’d like to see Gas move above 3.0 MMBtu to confirm a breakout. Seasonality is favorable for Nat gas right now and into October. Next period of seasonality is February to June.
ValueTrend initiated a position in silver this week. The chart suggests a textbook Cup & Handle formation – including the “high-low-high” traditional volume appearance for this basing pattern. I covered how to identify formations and their volume patterns in my book Sideways, for those interested in learning more on that subject. The handle in the current formation on silver is performing a classic test of old resistance (new support). Seasonally, silver can move well between mid-September and February. All of this suggests a reasonably good probability of success in the trade. Gold, too, has a good chart, although we preferred the silver play in the ValueTrend Managed Equity Platform.
The PowerShares Base metals ETF holds futures contracts in Aluminum, Zinc and Copper in equal portions. A break of the downtrend, and a rough looking Head & Shoulders bottom with volume confirmation on the neckline breakout suggest a bullish outlook. It’s hard to find seasonal research on the three metals, but copper does have a strong seasonal period that typically comes in around the end of the year or early in the New Year. If you are inclined to wait for the seasonal period, it may be worth watching to see if the sector jumps after the traditionally weak market environment in the fall.
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