Commodities Countdown

Commodities Try To Break Trend Lines 2018-08-24 Video


Breadth has improved considerably in the last 8 days. This has been a very important change. While some analysts have been bullish throughout the months of July and August, I was very concerned with the lack of new highs and the weakness in the Advance Decline lines. These breadth indicators have had a big bullish push.

In the middle panel, notice the weakness from mid July to early August. The fresh bullish thrust is very encouraging. On the lower panel, you can see the Advance - Decline line had been decelerating from early July until mid last week. It also broke the uptrend line one day. The fresh surge in advances is welcome news after 5 weeks of declines. What is also relevant is to look at the middle of August 2017. The market was oscillating sideways for June and July last year. In August 2018, right around the fed conference in Jackson Hole, the market started to surge. It would appear that we have a very similar setup here.

In currencies, we had a huge negative divergence on the daily chart for the US Dollar on the August price surge. I mentioned last week that this could potentially be an interim high. Well, the price action this week had a small attempt to rally on Thursday but gave it up on Friday. This is one of the reasons for my more upbeat look at the commodities specifically. 

It also shows an extreme RSI on the $USD weekly which might be even more of a clue that commodities might get some reprieve from the strong US Dollar.

Gold had a strong week after a huge range in last weeks trading with high volume. This could be a capitulatory low. It also fits nicely with the RSI signal on the $USD shown above as well as the negative divergence on the daily $USD chart. I like the Full Stochastic signal turning up on this weekly chart. We can also see the Relative strength in purple has a clearly defined trend to break. The price panel and the PPO both have similar trend lines to break. From my Chartcon presentation, Readers will find this is a great example of the trade setup. For more information on the ChartCon 2018 presentations, you can buy the complete video presentations of all the analysts along with the question and answer periods. Perhaps this setup will workout based on the hour long presentation for the setup and management of the trade.

Almost all of the commodity related ETF's have Full Stochastics below 20. This is an excellent place to try and find entries that have room to accelerate higher. See the video for more suggestions. 

The Energy sector was also mentioned last week as one to watch for a potential turning point. I would like these charts below to move above the 50 day moving average shown. That is typically a nice entry. The $BPENER is very low so it is at a nice turning point. How sudden this breakout occurs is unknown but the setup is in place.

On the video I cover off  Oil, Natural Gas, Steel, Coal, bonds, currencies and breadth. Agriculture had a rough week. Thanks for watching.

The Final Bar.

I appeared on MarketWatchers Live August 24th, 2018 hosting a segment called Everything StockCharts. You can see the entire show here. 

You can also click here to see Market Watchers Live Monday August 20, 2018.

If you are missing intermarket signals in the market, follow me on Twitter and check out my Vimeo Channel often. Bookmark it for easy access!

Good trading,
Greg Schnell, CMT, MFTA
Senior Technical Analyst,
Author, Stock Charts for Dummies

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Greg Schnell
About the author: , CMT, is a Senior Technical Analyst at 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
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