A Commodities Inflection Point

The original image was an inverted weekly chart of the Equally-Weighted CRB Commodity Continuous Index which was failing at resistance and beginning to break down.

The real image is flipped, with prices testing support and beginning to emerge from the downtrend line from its 2011 highs.

Is this the bottom in Commodities? That'll only be evident in hindsight.

What is obvious to me is that the reward/risk is no longer skewed in favor of the bears and if prices are going to form a structural bottom, this is a very logical level for it to occur at.

Prices are at long-term support, momentum is diverging positively, and we're starting to gain some upside traction. What else could we want?

Click on chart to enlarge view.

Another piece of this thesis is the Canadian Dollar breaking out of a similar pattern relative to the US Dollar. This currency is highly levered and correlated to Commodities, so if this  breakout is real then we'll see Canadian Dollars resolving to the upside as well.

Precious Metals have been the only game in town for the last year, but if this reversal in the CRB Commodity Continuous Index is real then we could see participation throughout the space begin to broaden.

And from an Equities perspective, if Commodities and Emerging Markets begin to work, we'll likely get the rotation into cyclical stocks that we've been looking for.

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Allstarcharts Team