Sunday, February 06, 2005

Sunday night charts--A top in commodities?

My long term view has been that commodities will do well over the next few years. However--John Maynard Keynes once said, "When the facts change, I change my mind. What do you do, sir?"

Let's first look at the weekly charts--

CRB

courtesy of stockcharts.com
Commodities really making a good show of breaking that long term trend line, wouldn't you say?
On the other hand, they are still above the 50d EMA and well above the 200 d EMA.

Gold,

courtesy of stockcharts.com
Right on that uptrend line. Time to decide--will the support hold or crack?

OIL (West Texas intermediate)

courtesy of stockcharts.com
A pullback, but still a solid uptrend. Looks like some nice support in the low 40's.
So, the CRB and Gold bull runs look like they might be in trouble. Oil still looks good.
What other evidence is there?
The gold ETF GLD was introduced on November 18, and Gold's high so far occured on December 1--a new product being brought in right at the top? Nah, couldn't be!

On Friday I caught Bob Pisani on CNBC make some comment about membership prices in the NYSE v. The Chicago Merc . The upshot was that NYSE seat prices have been in a range since the top in 1999, while membership prices in the CME have risen sharply since then.
As one might expect, NYSE prices topped out right around the top in share prices. If CME seat prices top out--that would be worrisome.

To put it together--while oil still looks bullish, gold and the CRB are making me a little nervous. If you're in, I might keep a tight stop. If you're not in, it might be prudent to see a little strength before getting in.

As always, the disclaimer.


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