Gold & Commodities

The Gold & Commodities category is a sub-section of General Market Analysis that includes charts and commentary associated with precious & industrial metals such as gold, silver, and copper as well as various commodities such as oil, gas, wheat, corn, etc…

Sep 182014
 

Let’s take a look at the charts of gold from a top-down approach, starting with the weekly chart. As mentioned in some of the previous updates on gold, a solid weekly break & close below the long-term uptrend line on the weekly chart of $GOLD (spot gold prices) would likely open the door for a move down to test the mid & late 2013 lows in gold prices. With $GOLD closing slightly below that uptrend line last week and, barring a very sharp rally into the close tomorrow, it looks like $GOLD will print another weekly close below that key support level, hence, I remain open to the possibility of additional downside in gold before any meaningful reversal. I had also previously stated that because so many eyes are on that mid & late 2013 double bottom, that I wouldn’t be surprised to see gold either reverse just shy of that level or to break below that level (either intra-week or for up to a few weeks) in order to shake out the last of the weak hands via a bear trap/flush-out move before a lasting bottom is put in place in the shiny metal. Of course that is making the assumption that the bear market in gold that began in Sept 2011 has run its course and that it was just another cyclical bear market within a much larger secular bull market in gold that has more room to run. Only time will tell if that proves to be the case but one of the factors that keeps me in the longer-term bullish camp on gold at this time (other than fundamentals) is the fact that even if we do take out the mid/late 2013 double bottom lows, gold prices have a very, very long way to fall before negating (i.e.-undoing) the very powerful bullish divergences that would remain in place on both the weekly PPO (similar to the MACD) and the RSI, as well as several other long-term price & momentum indicators and oscillators.

$GOLD weekly Sept 18th

$GOLD weekly Sept 18th

 

Moving down to the daily time frame on GLD (Gold ETF),  a case can certainly be made that, at the very least, the chances for a short-term bounce in gold are quite elevated at this time. Although this chart only shows 2 1/2 years of price history, if you look back over a decade on a daily chart of GLD you will see that, without fail, every single time the RSI 14 moved below the 30 (oversold) level, Continue reading »

Sep 172014
 
GDX 15 minute Sept 17th

GDX 15 minute Sept 17th

After hitting the first target/resistance level shortly after breaking above the 15 minute bullish falling wedge pattern last week, GDX pulled back to make a marginal new low. Although we didn’t get the immediate upside follow-thru that I was expecting, a potentially bullish case can still be made on GDX as even larger bullish divergences were put in place on yesterday’s new lows. I’ve redrawn the wedge pattern (new uppermost downtrend line) and the divergences on this updated 15-minute chart (the old lines from last week’s chart are now yellow) and my thoughts are summed up in this reply to a question on that unofficial 15-minute GDX trade from last week. Typically, “unofficial” trade ideas are those where my confidence is not a high as it is with the official trade ideas (those assigned to the Trade Setups and/or Active Trades categories).

Q: Randy, You had recently posted a short term trade idea for GDX bounce, resulting from oversold conditions along with three potential targets. Normally I sell my positions when each target is hit but this is such a small time-frame that I am debating if I should hold till T3 or to sell the same way when it reach a target and buy back at the pullback. What do you think ?

A: Tough to say as there isn’t a “one-size-fits-all” answer to that question. It’s really a matter of personal preference (trading style) and you overall take on where GDX might be headed . Although I had thought GDX would have already hit the second or third targets on that recently posted 15 minute chart by now, the trade is still intact with GDX only making a slightly lower low since entry (about 2% below the posted entry level). With that marginal new low even more powerful positive divergences were formed so GDX still has some bullish potential at this point although this trade can still go either way.

The bottom line is this: The second target/resistance level that I posted on that 15 minute chart which comes in around 25.00 is at the bottom of a thin zone. Therefore, if prices can manage to punch above the 25.10ish level, then GDX will likely hit the 25.70ish 3rd & final near-term target from that chart. As far loss mitigation, a move below yesterday’s lows of 23.68 could spark some additional selling so a stop slightly below that level, say 26.60-26.65, would be prudent.

Sep 152014
 

AA (Alcoa Inc.) will be added directly as an Active Short Trade here around the 16.62 level following the breakdown of this very steep, nearly 12 month old uptrend line. Targets are shown as T1 & T2 on this daily chart and the exact suggested buy-to-cover levels & stops will follow soon. To add to the case for a reversal in the steep advance in AA over the last year would be the fact that the Dow Jones US Aluminum Index ($DJUSAL) has run into the bottom of a significant long-term resistance zone while at rarely seen overbought levels that have historically preceded major tops in aluminum prices.

Sep 122014
 

DBA HoldingsSOYB (Soybeans ETF) will be added directly as an Active Long Trade at current levels (last trade was 20.46). I will make a case for the SOYB long trade below but keep in mind that SOYB is a thinly traded ETF and is one of several active long trade ideas in the soft commodities/agricultural industry. I also plan to likely add DBA (agriculture ETF) which holds the following stakes in various ag related commodities, including a target of 12.5% in soybeans futures.  Click on this DBA holdings chart to view the complete current weightings in DBA. With plenty of liquidity and the added benefit of diversification amongst various agriculture commodities (which can also act as a drag on performance, should some of the components lag), DBA is certainly a viable option for traders or investor seeking exposure to the ag sector at this time. I’m not bullish on all of the components of DBA, hence my reasoning for posting, as well as personally going long only select agricultural commodities at this time. However, with that being said I do think the chart on DBA is setting up bullish and will cover DBA in a separate post soon.

Although one could certainly trade soybean futures in lieu of SOYB, the trade ideas on RSOTC are limited to individual stocks and exchange traded products (ETFs, ETNs, CEFs, etc…) as those are the most popular and accessible trading vehicles for the majority of traders and investors.  Each individual may opt to trade futures contracts, options, or leveraged ETFs as a play on any of the trade ideas shared here. Even with the low volume on SOYB, the spreads do not seem excessive and unlike closed-end funds (CEFs), which often trade at substantial discounts or premiums to the underlying holdings, SOYB trades at NAV. With that being said, I typically prefer to use limit order vs. market orders on thin volume stocks & ETFs.

As with the recent WEAT & CORN trades, SOYB is clearly an attempt to catch a falling knife as prices have been in a powerful downtrend since peaking earlier this year. Therefore, this trade should be considered fairly aggressive until/unless we get some decent evidence of a trend reversal. Looking at the weekly chart of $SOYB (the spot price of soybeans), it appears that soybeans have fallen to the bottom of a decent support zone following a rarely seen overbought reading on the RSI 14. As this chart illustrates, very sharp rallies have immediately followed shortly after the RSI reached oversold levels. In fact, the exact bottoms did not come on the initial oversold reading but very shortly afterwards following a higher low on the RSI, such as we now have.

$SOYB weekly Sept 11th closing price

 

Zooming down to the daily time frame, $SOYB printed a hammer candlestick yesterday which is a potential reversal stick (pending upside follow-thru over the next few sessions). $SOYB also has very strong bullish divergences in place as it just tagged what appears to be the bottom of a descending price channel. My targets for SOYB will be roughly based off of this daily spot price chart as well as soybean futures. T1 (the 1168ish area) is my first & preferred target at Continue reading »

Sep 112014
 

As a follow-up to the previous post with the $CORN (Spot Corn Prices) weekly chart, below is the 5-minute chart of US Corn Futures as well as the weekly chart of CORN (Corn ETF), highlighting the current volume surge which is indicative of a selling climax.

click here to view the live, streaming chart of US Corn Futures. Once the page to Investing.com opens, from the top of the chart select: Instruments/More Instruments & then “U.S. Corn Futures” under the Commodities section.

Sep 112014
 

$CORN weekly Sept 11th

In the most recent update on the CORN (Corn ETF) Long-term Trade idea posted last week, it was stated that CORN had broken the 25.60 support level (below the recent consolidation range) which would likely open the door for a move down to the 340 major support level on $CORN (spot corn prices). Since the original post on the CORN trade idea back on July 28th, I had highlighted two likely scenarios for $CORN: either a bounce from around where $CORN was trading at the time OR a continued move down to the 340 level in which not only bring corn prices down to a key long-term support level and that we would also likely have strong bullish divergences in place on the weekly PPO when/if prices got there.

Although the chart of $CORN (spot prices) is an end-0f-day (EOD) chart, not updated until after the market close each day, I’ve been watching US Corn futures today and so far they kissed a low of 335.87 just a few minutes before I started working on this post and have since reversed sharply so far. Of course the day is still young but regardless of any short-term gyrations, we now have corn prices at key long-term support while extremely oversold (the weekly RSI 14  on $CORN was at an extreme level of 23.73 at yesterday’s close). We have the strong bullish divergences forming on the PPO as well as volume patterns on CORN (corn etf) that are indicative of a selling climax (ditto for WEAT, which I will cover under a separate update).

After stopping out the recent Active Long (swing trade) on CORN last week, I am going to add CORN back on as a new Long Trade idea. I also believe this is an objective area for a new entry or add-on to an existing position for the CORN Long-term Trade idea (investment) that was initiated in the July 28th post.

click here to view the live, annotated weekly chart of CORN

Sep 102014
 

GLD 60 minute Sept 10th

GLD is now within 65 cents of the aforementioned 119.50ish support level while rapidly approaching the apex of this 60 minute bullish falling wedge pattern, complete with positive divergences in place on the RSI & MACD. An upside break above the pattern would likely propel GLD to at least the 122 area, possibly higher.