Commodities Countdown

Coffee Perks Up And Oil Squeezes Shorts - Webinar Highlights

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What a week for commodities. A few of them started to move above the 200 DMA this week. After watching the commodities continue to get crushed year after year, is it really possible that they finally start to break out? I covered a lot on the Commodities Countdown Webinar 20160317. The charts below are some of the new developments in the commodities arena.

Here is one we have been watching for almost a year as it just keeps spilling lower. But today, we finally got a breakout above the sideways congestion. The SCTR surged above 90 for the first time in over a year and the volume surged higher than it has been for 6 months.


Oil continues to surge. This is really starting to squeeze investors who had short positions as we head into the contract expiration on Monday. Oil has broken above resistance and it is really starting to get pushed higher.

The $43.50 level was the most important support / resistance level in  2015. The $50.92 level that the red Fibonacci retracement starts at was a higher high and the market reversed from there. In two days it has surged from a 50% to 61.8% retracement. The market is very close to the 61.8% retracement level right now.

The blue Fibonacci retracement shows a level of 50% very close to the 2015 support/ resistance level. 

Between today's close at $41.67 and the $43.50 level, there are good technical reasons (Fibonacci retracement levels) for the market to retrace to here. The 200 DMA is also in the same place at $42.95. We also have the MACD surging to the same level as the last run against the trend in May/ June 2015.

This is a close-up look at the price position of oil. So the next $2 has some real reasons to stall the advance here. Caution is warranted.

Below is the chart of $NATGAS. The rally continues. There is still a lot of room between the current price level and the 200 DMA.

I spent a bit of time discussing the Quadruple Options Expiration (OE) Day that happens tomorrow. Quite a few of the market reversals happen within a few days of OE.

Notice the 5 previous lows on the US dollar ($USD) around the 94-95 level coincide with Options Expiration Day. Should we expect another reversal over the next few days? 

There is another chart that I like to keep track of. It is a method of tracking the market response to the Fed. Each blue line represents a Fed meeting. Notice the final highs in July and October were after the Fed meetings. The market wobbled for a week after the December meeting and then plummeted into February. Notice the September and February rallies were reversed by the Fed and marked the top of the interim highs between the double bottom lows. 

Lastly, the price action in the $SPX is almost an exact duplicate of the price action from last fall. I have moved the Fibonacci sequence straight across without adjustment for percentage move. Here is a comparison of the price move in the $SPX off the September low to when it stalled in November. Using the same grid, a move up to the 2051 level would be the same size. This is a log scale chart. It is only an approximation, but the October top came shortly after the Fed meeting above. We'll find out in the next few days if the analogy plays out.

If you would like to save any of these charts with the annotations, click on the chart, then click the annotation tool next, add a simple annotation and then click the upload button. This will allow you to save the chart with the annotations in your chartlist.

Once again, there were lots of interesting charts in the webinar. I tried to explain how some of my signals had turned bullish, but others had not. Here is a link to the webinar. Commodities Countdown 20160317. This is a very dynamic time for the market technicians. Some have enough signals to be bullish. I am very close to switching but will probably wait until the middle of next week as these volatile days roll over.

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Good trading,
Greg Schnell, CMT, MFTA.

 
Greg Schnell
About the author: , CMT, is a Senior Technical Analyst at StockCharts.com specializing in intermarket and commodities analysis. Based in Calgary, he is a board member of the Canadian Society of Technical Analysts (CSTA) and the chairman of the CSTA Calgary chapter. He is also the author of Stock Charts for Dummies (Wiley, 2018). Learn More
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