The question of the day is “What are commodity charts suggesting?”
Let’s take a look starting with the commodities index itself.
Click on any chart for a better view.
Monthly $CRB chart
The monthly $CRB chart is busted. It is right now on the 50MA that I believe is not likely to hold. A drop to the 200MA near 250 just might be in the cards.
$CRB Weekly Chart
Trendlines do not get much easier to follow than that. This one was right along the 50 MA for over 3 years. The trendline on crude is very similar. Given the weight in energies, that should be expected. This can easily be either an A-B-C correction lower or the start of something more serious. For now, it looks ominous.
This is another clear trendline.
It has also busted.
Very few thought we would ever see crude at $40 again.
I thought $45-50 when it was near $80.
That does not seem so outrageous now and $40 is clearly not out of the question.
Crude weekly is another busted chart.
Support zones are as shown.
Dr. Copper seems to have a date with 220.
If it goes no further the monthly trendline will hold.
The weekly chart of copper suggests a bounce off 220 as well.
If that fails to hold, the monthly chart will be busted as well.
Silver monthly is still intact.
Technically this chart can go either way but I suspect a breakdown as opposed to a breakout.
Silver is still holding the weekly trendline. It is now do or die with the 200MA long in the rear view mirror. A move there is not out of the question but as for now I suspect $10 will hold.
For all the consternation over gold, the monthly trendline is nowhere close to being in jeopardy but a drop to $500 is not out of the question.
Weekly gold has broken its trendline. But unlike crude or copper or the $CRB this pattern does not lend to possible impulsive decline interpretations. Also (for now anyway) the 50 MA is still holding unlike $CRB, copper, or crude.
In light of the above I still favor junior miners in gold and silver over other commodity plays. Several junior exploration stocks had a decent day today including MRB (nice bounce off the 50 EMA), GBN (bounce off the 200 EMA), and DLKM (strong bounce off support in what appears to be a bull flag forming).
If commodity prices hold, the value remains in juniors. If commodity prices collapse (and they could), bulls could be in trouble. Given my beliefs about deflation and gold, for safety preferences I prefer gold over silver and energy. For bigger swings both ways, silver may be more attractive to others. Given the situation in Iraq and Iran, as well as a likely US recession, energy is a huge wildcard. Does anyone really know what Bush will do? Because of the collapse in housing I have not been enthusiastic about copper for a long time.
Mike Shedlock / Mish/