Commodities Countdown

Top 8 Charts From The Commodities Countdown Webinar 9/3/2015

Greg Schnell

Greg Schnell

Chief Technical Analyst, Osprey Strategic

Well, we hit the ground running with the Commodities Countdown Webinar #1. The purpose of this webinar series is to analyze commodities so investors can use this knowledge in inter market relationships. By understanding the linkage between commodities, currencies, equities and bonds we can evaluate market structure and identify breaking trends.

One of the most interesting charts related to energy was the Energy Bullish Percent Index. $BPENER. This chart requires a lot of explanation, but it suggests we should be looking for an opportunity to go long energy stocks. I spent a few minutes on the webinar explaining this chart. The link to the Webinar archive is here. Commodities Countdown 9/3/2015.


Chart 1


This chart for Natural Gas shows rallies starting late September early October. Commodities Countdown 9/3/2015.


Chart 2

Gold continues to struggle. The chart of the Gold Miners ETF (GDX) is shown in Chart 3. The MACD seems to be setting up for a major break here. The MACD and price formation looks similar to the November-December 2014 setup. The MACD is making a much higher low. Will the MACD roll over like November 2013 or break out like December 2014?  Commodities Countdown 9/3/2015.


Chart 3

Looking specifically at Gold, it is at a long term support resistance line. A break down here is a big deal. It would suggest failing after backtesting the resistance line from below.  Conversely, the MACD looks like a level where it usually bounces from. I would highlight the setup for the move either way looks to be significant. We worked through the Gold and Silver charts and some correlations to read through.  Commodities Countdown 9/3/2015.


Chart 4

One of the serious concerns globally is deflation. The commodity charts have been screaming it, but we are very oversold. Oil below $40 last week. Gold and Silver have made new lows in the 3rd quarter.  The bond charts were covered in depth as they are poised for major moves. We started on the Inflation protected bond ETF (_TIP). The chart uses unadjusted data so interest revenue over time is not included. I identified this as one of the most important charts in the webinar. Commodities Countdown 9/3/2015.


Chart 5

The Junk bond chart (JNK) broke down through to new 4 year lows. If this can kick up from here, that would be bullish and be in agreement with the long bond shown on chart 7 breaking down. Commodities Countdown 9/3/2015. So far, the breakdown stands as the signal and that is bearish.


Chart 6

The long bond looks very vulnerable. $USB. This suggests getting long the TBT ETF. Commodities Countdown 9/3/2015. 


Chart 7

However, what conflicts with the chart of the $USB long bond breaking down is the Municipal Bond ETF (MYI). This is making new six month highs and is just short of all time highs. I use it more for a directional indicator for the 10 Year Note price shown in red. They correlate in direction more than the range of movement so I am looking for direction only. This says stay in bonds so far. More discussion in the webinar. Commodities Countdown 9/3/2015.


Chart 8

In summary, I used commodities to demonstrate the deflation setup appearing globally. I used the TIP Bond ETF to show deflation starting to show up in the bond market. The Junk bond ETF and the Municipal bond ETF both suggest staying in the safety of bonds but the long bond looks to be breaking down. For more details, you'll find a broader discussion on the webinar. The Bullish percent charts of the indexes and why they appear to be setting up a major buy level was a focus area within the webinar.  It's definitely a pivotal time. The deflation charts could send things plummeting as all these major trend lines break. The oversold level of the equities do not have to bounce here, but one should be looking for a rebound to start if history is a guide. I think the major trend is now down but bear market rallies can be swift and profitable. Commodities Countdown 9/3/2015.

Good trading,
Greg Schnell, CMT

Greg Schnell
About the author: , CMT, MFTA is Chief Technical Analyst at Osprey Strategic specializing in intermarket and commodities analysis. He is also the co-author of Stock Charts For Dummies (Wiley, 2018). Based in Calgary, Greg is a board member of the Canadian Society of Technical Analysts (CSTA) and the chairman of the CSTA Calgary chapter. He is an active member of both the CMT Association and the International Federation of Technical Analysts (IFTA). Learn More