Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Why You’ll Never Get Another Stimulus Check - 28th May 20
Implications for Gold – 2007-9 Great Recession vs. 2020 Coronavirus Crisis - 28th May 20
Ray Dalio Suggests USA Is Entering A Period Of Economic Decline And New World Order - 28th May 20
Europe’s Coronavirus Pandemic Dilemma - 28th May 20
I Can't Pay My Payday Loans What Will Happen - 28th May 20
Predictive Modeling Suggests US Stock Markets 12% Over Valued - 27th May 20
Why Stocks Bear Market Rallies Are So Tricky - 27th May 20
Precious Metals Hit Resistance - 27th May 20
Crude Oil Cuts Get Another Saudi Boost as Oil Demand Begins to Show Signs of Life - 27th May 20
Where the Markets are heading after COVID-19? - 27th May 20
Silver Springboards Higher – What’s Next? - 26th May 20
Stock Market Key Resistance Breakout Is Where the Rubber Meets the Road - 26th May 20
5 Ways To Amp Up Your CFD Trading Today - 26th May 20
The Anatomy of a Gold Stock Bull Market - 26th May 20
Stock Market Critical Price Level Could Soon Prompt A Big Move - 25th May 20
Will Powell Decouple Gold from the Stock Market? - 25th May 20
How Muslims Celebrated EID in Lockdown Britain 2020 - UK - 25th May 20
Stock Market Topping Behavior - 24th May 20
Fed Action Accelerates Boom-Bust Cycle; Not A Virus Crisis - 23rd May 20
Gold Silver Miners and Stocks (after a quick drop) Ready to Explode - 23rd May 20
3 Ways to Prepare Financially for Retirement - 23rd May 20
4 Essential Car Trade-In Tips To Get The Best Value - 23rd May 20
Budgie Heaven at Bird Land - 23rd May 20
China’s ‘Two Sessions’ herald Rebound of Economy - 22nd May 20
Signs Of Long Term Devaluation US Real Estate - 22nd May 20
Reading the Tea Leaves of Gold’s Upcoming Move - 22nd May 20
Gold, Silver, Mining Stocks Teeter On The Brink Of A Breakout - 21st May 20
Another Bank Bailout Under Cover of a Virus - 21st May 20
Do No Credit Check Loans Online Instant Approval Options Actually Exist? - 21st May 20
An Eye-Opening Perspective: Emerging Markets and Epidemics - 21st May 20
US Housing Market Covid-19 Crisis - 21st May 20
The Coronavirus Just Hit the “Fast-Forward” Button on These Three Industries - 21st May 20
AMD Zen 3 Ryzen 9 4950x Intel Destroying 24 core 48 thread Processor? - 21st May 20
Dow Stock Market Trend Analysis and Forecast - 20th May 20
The Credit Markets Gave Their Nod to the S&P 500 Upswing - 20th May 20
Where to get proper HGH treatment in USA - 20th May 20
Silver Is Ensured A Prosperous 2020 Thanks To The Fed - 20th May 20
It’s Not Only Palladium That You Better Listen To - 20th May 20
DJIA Stock Market Technical Trend Analysis - 19th May 20
US Real Estate Showing Signs Of Covid19 Collateral Damage - 19th May 20
Gold Stocks Fundamental Indicators - 19th May 20
Why This Wave is Usually a Market Downturn's Most Wicked - 19th May 20
Gold Mining Stocks Flip from Losses to 5x Leveraged Gains! - 19th May 20
Silver Price Begins To Accelerate Higher Faster Than Gold - 19th May 20
Gold Will Soar Soon; World Now Faces 'Monetary Armageddon' - 19th May 20

Market Oracle FREE Newsletter

Coronavirus-stocks-bear-market-2020-analysis

Basic Materials and Commodities Analysis and Trend Forecasts

Commodities / Metals & Mining Jul 20, 2017 - 02:08 PM GMT

By: Rambus_Chartology

Commodities

Since the Basic Materials sector is breaking out I would like to take an in-depth look at some of the stocks that make up the Basic Materials sector along with some commodities in general. Most commodities have had a tough go of it since they topped out in 2011, but there are some signs that they may be bottoming, which could lead to a substantial rally over the intermediate to the long term. As you will see some of the bottoming formations are very symmetrical while others are pretty ugly, but as long as they can make a higher high and higher low an uptrend is in place.

Lets start with the CRB index which built out a one year bearish rising wedge formation that broke to the downside in March of this year. The price action has been chopping to the downside and has gotten a bounce to the upside in late June. Normally the price objective of a rising wedge is down to the first reversal point where the pattern started to build out.


There is another pattern I’ve been keeping a close eye on which may have given us a good clue today that we may have a consolidation pattern building out which is forming above the January 2016 low. As you can see on this long term daily chart for the CRB index it has built out a sideways trading range which broke to the downside last month, which wasn’t a bullish development if one was bullish on this index.

Expanding patterns, whether they’re a triangle, flat top or flat bottom, expanding falling wedges or expanding rising wedges, are some of the more difficult formations to find in real time. The reason being is that with the pattern on this daily chart below shows a false breakout below the bottom rail, blue horizontal dashed line, which looks like a breakout to the downside. With today’s price action closing back above the blue dashed line we now have a potential flat top expanding triangle. If the price actions can close above the top horizontal trendline, the flat top triangle will be the first consolidation pattern in the CRB’s index’s new bull market.

This 75 year quarterly chart for the CRB index shows you just just how bad the bear market has been. To really get this index bullish again I would love to see the price action trading back above the brown shaded S&R zone above 200 or so, which would create an unbalanced double bottom. By looking at the daily chart above you can see how the unbalanced double bottom would look like if the top rail of the expanding flat top triangle is broken to the upside. If the possible unbalanced double bottom plays out we are just in the first inning of a 9 inning game.

This next commodities chart is a long term monthly look at the DBC which is much more actively traded than the CRB index. Instead of an expanding flat top triangle the DBC is building out a possible flat bottom triangle. Again, this potential pattern has a chance to be a consolidation pattern to the upside if it can take out the top rail. No matter how you look at the current price action there is still a lot of work to do before we get any type of resolution to the trading range. A break below the bottom rail will ensure a move back down to the previous low and on the other hand, a breakout above the top rail will put the bull market thesis into play.

Next I would like to focus in on the XLB, basic materials index, which is made up of many large cap stocks. The last time I did an in depth report on the XLB, I suggested this index should do very well as long as its top 5 components were doing well.

Now lets take a look a daily chart for the XLB, basic materials index, which is showing it has just broken out of a 6 month blue expanding flat bottom triangle with a small H&S bottom that formed as the backtest. Today this basic materials index closed at a new all time high.

Below is a 4 year weekly bar chart that is showing the breakout from the 6 point flat bottom triangle consolidation pattern into new all time highs this week.

The long term monthly chart for the XLB shows its entire history and its bull market uptrend channel. If the 6 point expanding flat bottom triangle is breaking out topside then the original top rail of the major uptrend channel will be taken out. Generally when that happens you can see another equal channel higher giving the uptrend 3 equal channels instead of two. The black rectangles shows how this new uptrend may play out.

This next chart is a long term monthly chart for the XLF which I’ve been showing you how the lower channel may be morphing into a double uptrend channel with equal lower and upper channels. This is the same principle as the XLB chart above which is forming a possible third channel.

This last chart for the XLB is a monthly line chart going back 20 years. The reason the XLB looks so good is because it’s made up of many very big large cap stocks that we’ll look at in a moment.

Next lets look at the XME, metals and mining etf, which broke out of a double H&S bottom last fall and has recently been backtesting the neckline forming the blue falling wedge as the backtest. Last week the price action finally closed above the 30 week ema.

The first 5 stocks that make up the XLB account for nearly 45% of this index. For 2 years the DOW, Dow Chemical, built out an expanding triangle that broke out to the upside about 8 months ago, and is currently trading at a new all time high. It has the highest weighting at 12.1%

Next is DD, DuPont, which has broken out of a bullish rising wedge which makes up 11.9% of the XLB and is also trading at a new all time high.

Below is a monthly chart for MON, Monsanto, which is just completing the 4th reversal point in a massive 10 year triangle trading range. It has a weighting of 9% in the XLB.

Number 4 on the list is PX, Praxair, which is still trading inside of its bull market uptrend channel that began to form way back at the 2000 low. It has a weighting of 5.9% and is trading close to new all time highs.

PPG. PPG industries, is 5th on the list and is trading close to new all time highs building out a very large triangle consolidation pattern. It has a weighting of 4.8%.

In part 2 of this report we’ll look at some of the different commodities and stocks within those commodities which are all over the place at the moment with some showing strength while other as still showing weakness. At some point if the bull market really takes off we should see the whole complex moving up together with all areas enjoying their own individual bull markets. One step at a time.

Rambus

https://goldtadise.com

© 2017 Copyright Rambus- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Rambus Chartology Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules