From the Desk of Ian Culley @IanCulley
What happened to those everyday commodity contracts the average investor follows?
I’m talking about crude oil, gold, and copper.
These days, it’s all about cattle futures, orange juice, or cocoa hitting an all-time high.
I’m sure everyone down at the NYMEX or the folks over at the CBOT in Chicago are having a ball. But what about the stock traders trying to get a piece of the action?
Sure, the energy trade is starting to work again. But gold has been a range-bound mess since the summer of 2020. And gold mining stocks have been an absolute dumpster fire.
It just doesn’t make sense amid a commodity bull run…
No, the absence of gold and copper breakouts doesn’t make much sense, and neither does crude oil underperforming gold as interest rates rise:
But black gold’s lack of relative strength speaks more to the range-bound nature of precious metals than crude oil weakness.
In fact, Gold is retesting its 2020 high for the fourth time in just under four years.
Will it finally break out?
I don’t know. But an upside resolution in gold futures will likely kick off the next leg higher for the broader commodity space.
John Murphy points out in his classic, Intermarket Technical Analysis: Trading Strategies for the Global Stock, Bond, Commodity and Currency Markets, “Gold doesn’t react to inflation; it anticipates inflation.”
Gold led the commodity space in 2020, and it will lead again. When it does, you’ll get an ear full of copper and crude hitting new highs.
Shoot, they might even start talking about the CRB index again.
Are you ready?
-Ian
COT Heatmap Highlights
- Commercial hedgers posted a record-long position in soybeans and a fresh three-year extreme in soybean meal.
- Commercials continued to increase their long exposure to the Japanese yen, pulling within three percent of a new three-year extreme.
- Commercials dumped 30-year T-bond futures last week, posting their largest short position in there years after shorting more 68,000 contracts.
Click here to download the All Star Charts COT Heatmap.
Trade of the Week
Today, we’re outlining Hess Midstream LP $HESM, an $8B oil and gas midstream:
HESM is nearing the completion of a multi-year base after multiple breakout attempts earlier this year.
We’re buyers on strength above 35, targeting 42. All bets are off if HESM closes back below our breakout level.
Thanks for reading.
And be sure to download this week’s Commodity Report below!
Allstarcharts Team
