I think commodities are probably ready for a counter trend bounce. I'm using oil as an example because the parabolic move is more evident. The weekly oscillators are now oversold. This is the level were I think we can expect a rally. Bullish sentiment doesn't evaporate quickly, especially after the kind of run we just experienced. The commodity bulls are now thinking they have the buying opportunity of a lifetime. I believe they are going to be disappointed as I think this rally is eventually going to fail and roll over again.That's not to say I won't take a trade here to catch the bounce, I am. I will not however expect that it's party time again and that oil is now going to $200. The world is facing deflation. If the stock market does roll over here it puts this 4 year cycle in jeopardy of repeating the 1930 cycle. That was also a very left translated cycle. In that scenario everything is going to get sucked down by the bear.
So for now I do think commodities are going to rally but I won't count on it being anything other than a counter trend rally as Mr. Market does his best to take the most money from the most participants...as usual.
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20 comments:
NAT
Unfortunately we are really screwed in thee coming election this fall. Neither of them are or will address the real issues at hand. The same ole pandering to certain certain votor class and promise the world only to fatten their own ass when they get into office. When will America wake up to this mess. I actually believe it is too late to fix and we will suffer greatly in the coming years.
Central America/New Zealand here i come!
I have been selling all real estate over the past few years and only have a couple of pieces left.
I just have a felling its gonna get ugly.
jl
wow...9.3M vs 1.0M..i wonder who are these analyst people..must be the dumbest ones in the world..
N
JL;
totally agree about the political situation..Its funny I was discussing similar with the wife two weeks ago..sell all our property and just find a place to hunker down...but really there is almost "no where to run to baby, no where to hide' LOL..New Zealand sounds nice though..Well I have been preparing for worst for a few years..I just want to protect what I have now.
Gary:
You follow Richard Russell right?
I saw where he says to sell everything but actual bullion and wait in t bills for the bargains...your thoughts on this?
Russell doesn't ever sell gold. So if you just want to buy and hold sure. If you want to try and time the larger cycles to some extent then we have to sell some of our positions at tops and buy at bottoms.
The larger time frame is broken. So as soon as this rally runs it's course I'll trim my core positions just a bit and put that capital to work on the short side.
Anyone have the oil inventory #'s? I was out climbing this morning.
Gary:
9390k.
NAT
I can't believe the market is holding here the way these credit spreads have blown way out. Hussman has a great weekly update. A must read.
jl
credit spreads are creating a large negative basis in the cds-cash high grade market.... but it looks like there is still too much leverage among institutions, normally its an ease arb for institutions but when you require borrowed money to exploit this basis it becomes unattractive as the financing costs are more than the basis would yield
Dept of Energy reports that crude oil inventories had a build of 9390K (Bloomberg consensus is a build of 1000K); gasoline inventories had a draw of 6202K (Bloomberg consensus is a draw of 3000K); distillate inventories had a build of 481K (Bloomberg consensus is a build of 1000K)
Timmy
Thanks for the info! HAHAHA..DUH!
Gary
If you are playing this bounce what is a good exit point for you for Gold. I am thinking the 880 to 900 area. Do you think this is too high?
Are there any bloggers left NOT calling for deflation?
Gary: Are you planning to buy airlines on this dip tomorrow and later?
You know what, folks? There were 42.78 gajillion people looking for a market tumble after the SPX broke its bear flag. Now with oil up $6 today... which was supposed to be the catalyst for a bigger sell-off... the SPX holding its own. I smell a short squeeze.
I won't buy airlines until I think oil has topped.
doc -
i'm not sure what is going on with SPX - short squeeze or otherwise.
but I do believe strongly that by the end of the month and into mid-Sept it will be lower than it is today.
Also, with today's market, $HUI and $XAU were given a BUY signal on the Mass Index. (rather incredible timing, once again).
Other notables getting the buy signal include GDX (2 days ago), GG (four days ago), SLW (3 days ago), CDE (4 days ago), ABX (3 days ago), GOLD (2 days ago), PAAS (yesterday), SSRI (yesterday), and on and on.
SDS gave a buy signal 9 days ago, as did QID (9 days ago) - for those index traders.
$GOLD and $SILVER have not yet been given a buy signal on the Mass Index.
*************
Interested in seeing this data for yourself, here's how:
- www.vss2000.com
- choose 'Advanced Charting'
- select 'Mass Index' from lower indicators
- select 9 day simple moving average
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Mass Index: when it rises above 27.0 and then falls down through 26.5, that is the signal - the direction of the 9 dma is about to reverse.
Mr. T.
Gary
If you are playing this bounce what is a good exit point for you for Gold. I am thinking the 880 to 900 area. Do you think this is too high?
Frank
Frank,
I'm going over that in tonight's update. I'll have it out a little later this evening.
Hi Gary,
What is your take on the fact that commericals are holding their largest net short US Dollar index position since 2005? Perhaps the dollar index will make a new low on the short term, before the commodity deflation restrenghtens the dollar?
Thanks for your insights.
-Narayana
I am actually going over that in the weekend update. I do think the dollar is due a pullback before the counter trend rally resumes.
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