This is the video recording of our November 7th Monthly Charts Live Strategy Session

From the Desk of Ian Culley @IanCulley

Metals have been one of the weakest areas of the market this year.

It doesn’t matter if we’re talking about the materials sector, commodity space, base and industrial metals, or gold. These assets have carried nothing but downside risk.

But mix in a little dollar weakness, and we see an impressive display of strength. Metals are finally looking like they have something to prove.

Yes, it’s only one day of action. But it’s a day worth noting…

Check out the breakout in copper futures, posting its largest single-day return since 2009:

This is a big development for commodities and risk assets in general.

From the Desk of Ian Culley @IanCulley

Energy stocks refuse to lose.

We can’t deny the relative strength of the energy space, whether we’re talking about stocks or commodities. But it’s been equities over the raw materials for months now.

It doesn’t look like that will change any time soon. However, I doubt energy contracts will be left behind.

Let’s run down the most actively traded contracts for crude, gasoline, and heating oil. First, crude oil:

The December contract has chopped around a key level of former support at 85. Despite the sloppy nature of the chart, I don’t hate a long position here. But that's only if it’s above 85.

You certainly see it in life - the losers usually continue to lose. And winners win.

It's the same thing in the stock market. Winners tend to keep on winning, and the losers remain losers for a reason.

With the whole ESG scam unraveling over the past couple of years, the market has voted with their dollars.

That's what pays.

Not cute bed time stories. Actual Dollars.

Forget the narratives. I want to know what investors are ACTUALLY doing.

And as we have documented here consistently, the voting dollars are being used to buy Energy.

But I continue to be impressed with the strength in Energy stocks, despite the correction we've seen in Crude Oil Futures.

Look at that relative strength:

From the Desk of Ian Culley @IanCulley

It’s easy to lose sight of how impressive energy has been this year. 

We get it. Sideways action is boring.

But while the rest of the market has been selling off, energy has shown incredible resilience, digesting gains in a continuation pattern since early summer.

After an explosive rally for energy stocks off the 2020 lows, it’s normal to experience an extended period of corrective action. In fact, it’s healthy. 

Now get this...

Many of these stocks haven’t even broken out yet!

We know it sounds crazy, especially when some of these industry groups have more than tripled during the trailing 24 months.

But the charts don’t lie. They’re telling us some of these trends might just be getting started. Let’s take a look.

We can break down oil and gas companies into three main categories: upstream, midstream, and downstream. 

This is the video recording of the October 2022 Mid-month Conference Call.

We discussed:

• The DJ Industrial Avg at the Pre-Covid Highs
• Fewer Stocks are making New Lows
• Small-caps, Mid-caps & Micro-caps diverging positively
• Sentiment is at a historic bearish extreme
• Credit Spreads tightening the past 4 months
• Negative Correlation Between US Dollar & Stocks intact
• Consumer Discretionary outpacing Staples
• Sector Level trends are improving
• Energy making new 52-week highs relative to Stocks
• Shorting these REITs and Software Stocks
• Industrials & Regional Banks making new 52wk relative highs
• More Bullish Options Activity in Occidental Petroleum
• Coal Stocks Setting Up For Breakouts
• Industrial Stocks ready to bounce
• Financials holding Support
• Copper/Gold ratio not confirming new highs in Yields
• 5 & 10/yr Breakevens peaked quarters ago
• Emerging Markets down near critical levels
• Seasonally the best time to buy stocks
• List of my favorite stocks to buy

From the Desk of Ian Culley @IanCulley

The commodity markets never lack action. 

Since it’s such a diverse asset class, we’ll always have contracts we want to buy, some that we want to short, and others we want to avoid.

Today, I’m going to outline one of each. Let’s dive in!

The Breakout

According to the latest reports, Hurricane Ian (strong name, terrible storm) may have cut the Florida orange crop in half.

Whether it’s true doesn’t matter. I’m more concerned with a well-defined level to trade against. Check out the daily chart of orange juice futures:

The chart looks good to me! A five-month base breakout to fresh five-year highs is the kind of strength I like to buy.

From the Desk of Ian Culley @IanCulley

I love it when a pattern carries both bullish and bearish implications. It could break out or break down. Either direction works for me.

That’s the beauty of the setup. 

For traders, the directional move doesn't matter. We can prepare for both outcomes. And, lucky for us, sugar futures look ready to swing either way.

Check out the weekly continuation chart of sugar:

Sugar posted a big base breakout followed by a year-long consolidation. This chart looks similar to gasoline, crude oil, and copper – which have all broken down to retest their respective 2018 highs.

It’s reasonable to imagine sugar futures do the same. But we have to see the move before we can take action.

This is the video recording of our October 3rd Monthly Charts Live Strategy Session

From the Desk of Ian Culley @IanCulley

After months of selling pressure, the most widely followed commodity contracts are testing critical potential support levels.

More importantly, these support levels are the prior-cycle highs marked by the 2018 peaks. If there was ever a place where the bulls needed to step in and repair the damage this is it!

But, if these levels fail, we’ll have to rethink the structural uptrend in commodities.

Let’s run through the charts.

First, we have our commodity index that equal-weights the top 33 contracts in our universe:

From the Desk of Ian Culley @IanCulley

It’s not all doom and gloom out there… 

I know the market’s ugly right now. Risk assets are getting crushed across the board. 

But, believe it or not, greener pastures do exist in this market.

And, on days like these, I choose to focus on areas that aren’t free-falling into the fiery depths of hell.

Last week, I discussed the relative strength of the less economically sensitive grain complex. These contracts are more defensive in nature and are currently escaping the broad selling pressure.

That’s a relief!

When it comes to today’s trade ideas, I’m sticking to the individual contracts with the highest volume heading into the fall. Those are the charts and levels of the most importance.

Do the levels on the continuation charts come into consideration?

Absolutely!

Premium members can reference our Commodity Chartbook below for our structural outlook and reach out at info@allstarcharts.com with further questions.