Commodities Countdown

The Commodities Index ($CRB) Is Near 4 Month Lows - Panic Time?

The foreign markets have been breaking out this week while the Commodity markets are trying to find direction. After making a new 3-month low, it is hard to be bullish. Even after the Commodity rally off the lows last year, we were unable to trigger a bull market signal on the weekly RSI chart. For a bull market to be starting we want it to rally up to the 70 level. Even then the RSI signal can fail, like in 2014, but we can see between 2002 and 2008 the RSI hit 70 and stayed above 40 for most of the 7 years. It never got down to 30 for those 7 years to trigger a bear market signal. Currently our last signal was a bear market signal (hitting 30 in 2014) and has not been able to rally to 70 to make a bull market signal.

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CNQ Acquires Oil Sands Assets From Shell - Boom!!!

In a bombshell press release this morning, Royal Dutch Shell (RDS/A) announced it was selling all of its oilsands mining operations in Canada. On the other side of the agreement, was Canadian Natural Resources (CNQ.TO, CNQ). The size of this deal is not portrayed in the price. The assets changing hands are massive. Just the 100,000 barrel Expansion 1 back in 2011 was huge. 

A snippet of the size of these assets. The Expansion 1 project, at one point employed 10,000 people and was the largest construction project in Canada. That project was $14.3 Billion! That was only 40% of the production from AOSP. The existing Muskeg River mine was 155,000 barrels per day. This is a massive, massive project. As a comparison, about 5 new car factories could be built if they had to replace all 255,000 barrels with new capital.

Part of the $14.3 Billion for Expansion 1 was the Scotford upgrader which was included in this deal so without question, it's a massive win for CNQ. There is so much to this deal.

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Commodities Stocks Wiggle While Dow Soars Through 21000 - Total Active Symbols

For such an outstanding broad based rally by the overall market, I found the rally size was pretty small in the Commodities pillar of the market.

The Gold stocks (GDX) rallied 1/2%. While a rally is great, when it underperforms the broad index rally by less than 1/2 the size, it is a bit underwhelming. The 50 DMA has been nice support and resistance for the Gold Miners for over a year. Today was a bounce off the 50 DMA. Perhaps its the start of a new rally. If it had led the market today, that would have been a little better clue. At this point, it looks more like it got dragged upward with the market.

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Commodities: The Moment Of Truth Has Arrived

Commodity related stocks had a ridiculously bad day by any sort of measure. Gold was up $18 and the GDX hardly budged. Oil stocks have been unable to rally this week with crude oil testing a small breakout, only to reverse. The Metals ETF broke a year long trend line today. The Uranium related ETF broke the 2017 trend line. The Copper ETF broke its trend line. The Steel ETF keeps struggling at resistance.

The big picture question for me: If Commodities can't get any love in a big roaring bull market, when are they going to get some? Based on today's failures across the board, soon doesn't appear to be one of the options.

In the primary pane below, the Gold stocks:Gold ratio (GDX:GLD) has broken its trend line and was a pretty good sell signal in August. Today's action is easy to see in the zoom panel. Gold up sharply, no response from the miners. Extreme caution is warranted.

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There Are Mixed Signals In Commodities

"We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful" - Warren Buffett

With the current fire lit under the Equities markets and no fire truck in sight, it seems that everyone is unabashedly bullish. Various breadth indicators including the Net New Highs, the Advance Decline lines, the McClellan Summation Indexes, the Volume Summation Indexes, Bullish Percent Indexes, and the Percent of stocks above the 200 DMA are all screamingly bullish. While the market soars, these charts continue to support the data.

The Net New Highs ($NYHL) chart is wonderfully bullish.

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Can Energy Bounce Here? - Webinar Skim 2017-02-09

The Energy Sector (XLE) is trying to bounce off the uptrend line. There is also a horizontal support line and the 200 DMA just below. 

Based on the KST it looks a little early. Looking through a lot of individual energy charts, they are at support. The kick up in XLE on Thursday is worth watching. There is a seasonal tendency higher for energy at this time of year.

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