A Commodities Inflection Point

JC Parets
October 31, 2019

From the desk of Tom Bruni @BruniCharting

Tuesday's Mystery Chart is one of the most interesting charts right now, so thank you all for your feedback and participation.

Most people were on the same page in saying they wanted to short the breakdown, while others wanted to avoid the mess entirely until there's a decisive break.

With that as our backdrop, let's get into it.

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.

If you enjoyed this post and want access to our premium research, start your 30-day risk-free trial or sign up for our "Free Chart of the Week" to receive more free research like this.

Thanks for reading and please let us know if you have any questions!

Allstarcharts Team

Filed Under