Commodities
As mentioned above, crude and copper were likely to enjoy some seasonal firming
into mid-September. Crude's panic low was 37.75 and it jumped to 48.42 on the
first of the month. It checked back to 44 and now it's at 47.50. The Daily
RSI has gone from very oversold to somewhat overbought. The swing in momentum
suggests the rise could soon get tired.
Also, there is considerable resistance at the 50 level.
For copper, the rise has been from 2.21 to 2.48 and the momentum is not as
robust as for crude. There is resistance at the 2.50 level.
Both copper and crude have been tracking seasonal swings rather well. On this,
the next lows would be late-November for copper and late-December for crude
oil.
Grains (GKX) sold off to 273 on September 7th. The rebound made it to 291
on Tuesday. That is right to the 50-Day ma that turned back the rally to 298
in August. Wheat can set a seasonal high in August ()
and then lows in October and November.
The outlook for most commodities remains melancholy.
Precious Metals
Yesterday's pop in gold seems sympathetic to the rallies in crude oil and
other commodities. This move has been seasonal into mid-September and the firmer
commodities could rollover next week.
Gold's rally from 1072 in late July to 1170 on August 24th was appropriate.
In a financial storm, it was a true flight to liquidity. There will be more
need of gold's unique liquidity. Today's ChartWorks considers that the target
for gold is 1145 to 1185.
Essentially, gold stocks rallied with the storm. HUI moved from 105 in early
August to 133 on August 22nd. Last week, it set a new low at 101. It is now
at 110.
Our basis for re-entry is to have stability in gold shares relative to the
bullion price.
HUI/Gold index reached new lows at 91.4 last week. However, it has been trading
around 95 and if it can hold for a few weeks it would be constructive. But
the overall technical picture is not positive enough to begin accumulation.
