Commodities Countdown

Sitting In Front Of The Fan - Webinar Review 2016-05-27

Greg Schnell

Greg Schnell

Chief Technical Analyst, Osprey Strategic

Some days the market is a headwind but this week we got a breakout on FAN, the wind energy ETF. On this long weekend perhaps you are going to be sitting someplace hot, in front of the fan!

I mentioned the FAN chart above on this week's Commodity Countdown Webinar 2016-05-26 but did not have time to show it. There were lots of interesting points in this week's review. Corn breaking to a higher high, Coffee and Natural Gas stalled at resistance and Crude Oil ($WTIC) made it to the $50 mark.


"Commodities Countdown LIVE!" with Greg Schnell - 2016-05-26 17:00 from StockCharts.com on Vimeo.

Webinar // Summation Indexes 5:00 //$CRB Components 10:00 //Goldman Sachs Commodity Indexes 23:00 // Energy and XLE 26:00 // Gold and Silver 34:00 // $LUMBER 40:00 //$COPPER 40:00 // Agricultural Commodities 43:00 //Industrial Metals 47:00 // Agricultural Related Stocks 49:00 // Q&A 55:00 //

Let's start with Energy:

Crude ($WTIC) touched the magic $50 level. Actually, there is nothing magic about it. However, the $47 level seems to be the middle of the support/resistance area. The 50 DMA is at $44 and the 200 DMA is at $40. It would not be uncommon for the price to come back and test the 200 DMA again. Looking left on the chart, we can see a lot of bounces off the $44 level. If it could hold $44 it would maintain a sequence of higher lows by staying above the early May lows. 

To start a channel trend, the first line would connect the highs of mid-March and May. A parallel line placed off the April lows would put the bottom of the channel at $40. By removing other data annotations and focusing on the channel, the current trend is just as important. We can see the lines generate a channel width of $10 which is huge as it is also 20% of the current price. Be prepared for some volatility.

Natural Gas ($NATGAS) continues to hover at $2.10. This chart cannot break through the 200 DMA. When it does, it will probably mark a meaningful change in trend. There are some prominent Twitter Technicians that reject the 200 DMA as anything meaningful. Fine. Each technician has his own methods much like Elliott Wave Theory and Fibonacci retracements.

I like to be aware of the smoothing mechanism of the 200 DMA. A down-trending 200 DMA is a weak chart. Moving back above it means something to me. The MACD is trying to turn higher while above zero, so that could mark a meaningful turn. I'm keeping an eye on it. However, it is currently trapped under the 200 DMA. 

Gold declines look set to continue:

I continue to think that the gold chart and the gold miners need a bit more time. The miners are underperforming gold now which is usually bearish. This will probably accelerate if $GOLD in the lower pane makes fresh 3-month lows using the closing values.

Agricultural commodities continue to simmer:

There was a lot of Agriculture related content on the webinar again. DBA is an ETF with a bushel of different futures contracts like coffee, corn etc. It is trying to break out again on Friday, May 27th.

Here is the Corn tracking ETF (CORN). We can see a glimmer of hope in the bottom right corner. This may be due to ethanol coming on now that oil prices have started to rise.

Agricultural related themes continue to simmer. Continue to stay tuned in on the Commodities Countdown blog for more commodity-related themes. Click Yes on the button below to get these blogs delivered to your inbox. You can also follow The Canadian Technician blog which also has some commodity related ideas. Click Yes at the bottom of each blog (not each article!) to subscribe for email updates with a couple of articles a week. PS. Don't forget to watch this week's webinar if you missed it!

"Heads Up" on Chip's special invite to Chartcon 2016. As this is already filling up quickly, read point #4 carefully. With only 10 spots, 4 are already gone.

Lastly, if you are a Twitterian, you can follow me 140 characters at a time @Schnellinvestor. For the Americans, have a great long weekend. For everyone else, have a great weekend!

Good trading,
Greg Schnell, CMT, MFTA.

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