From the desk of Steven Strazza @Sstrazza and Ian Culley @Ianculley
Whether you trade commodities or not, it’s been impossible to ignore the recent sell-off in Lumber, as prices have collapsed almost 30% in just the last month.
We pointed out in May that Lumber was due for a digestion of its recent gains.
Well, let’s just say we got a lot more than that! Sometimes markets correct or consolidate through time, and sometimes they correct through price.
And Lumber is most definitely correcting through price!
But Lumber is not the only procyclical commodity to enter a corrective phase. More recently, DR. Copper has begun to digest its recent gains through price as well.
These corrections have already done some damage to the primary uptrends at play as both of these economically sensitive commodities have recently violated critical support levels.
Another point we raised last month was that many risk-on commodities were hitting their upside objectives, and/or running into resistance at key prior highs or other logical levels of supply.
These observations still stand true today as evidence continues to mount and suggest that these messy markets aren’t likely to go away anytime soon.
Now let’s dive into these two commodities and use them to illustrate the type of environment risk assets are currently in. [Read more…]