Forget about what Powell said or whatever you heard on the street.
We’re still looking for risk assets to buy.
That includes stocks and commodities. Despite the dollar applying downside pressure to risk assets this morning, I want to share one commodity that looks ready to rip…
Check out the weekly chart of Cotton futures:
Cotton experienced a sharp decline last year following an impressive run-up off the 2020 lows. Fast forward to today, and it’s challenging a critical retracement level from below at approximately 89.
The bulls have hammered this level since October of last year. And the way I learned it…
The more times a level is tested, the higher the likelihood it breaks.
The Bloomberg commodity index $BCOM is breaking down, approaching fresh 52-week lows.
Somehow Gold and Copper didn’t get the memo. They must be too busy printing new highs.
But when we review other major commodity indexes (including our own equal-weight index of 33 individual contracts), they look poised to roll over.
Check out the triple pane chart of the Bloomberg, CRB, and our equal-weight commodity indexes:
It’s interesting to note the differences between these indexes. The weighting structures vary, as do their support levels. But the CRB index and our equal-weight commodity index challenge their 2022 lows while the BCOM has undercut its respective lows.
With only a few trading hours left in the year, I’m ready to turn the page. I’m sure plenty of you can relate.
In the spirit of looking ahead to a bright and beautiful 2023, I want to share seven of my favorite commodity charts for January.
No grand thesis, just seven potential setups that have my attention heading into the new year.
1. Sugar
Sugar futures print a potential failed breakout after coiling within a tight range since the summer of 2021: The lack of upside follow-through accompanied by a bearish momentum divergence warrants caution.