“Head & Shoulders Top” suggests 30% decline still possible



The TR Commodity Index has been in a fairly well defined rising channel over the past half century. After a solid rally that lasted around a decade (1972-1983), the index then peaked and fell for the next 20-years. 

The index then hit the bottom of the channel back in 2000 and again rallied for around a decade (2001-2011), taking it back to the top of this long-term channel.

From a very long-term perspective, it appears that the index created one of the largest "Head & Shoulders topping patterns" I have seen in my 35-years in the business.

Even if I am 1,000% wrong on the H&S pattern, without a doubt the index did kiss the underside of an 11-year support line that became resistance last year and resistance held, as the index has been falling off the table since!

FYI- In case you were wondering, the index kissed the underside of resistance in March of 2014, "months before crude oil peaked!" 

Joe Friday just the facts...This index remains in a downtrend and channel support comes into play around 30% below current prices. 

Bond players like this, Commodity players are concerned about it and the jury is out how stock players will react should this index fall another 30%!



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King Dollar is losing this currency battle of late!



When you look at few of the leading currencies around the world over the past 30-days, no doubt the U.S. Dollar is acting pretty strong, especially against the Euro.

If you add Gold and Silver to the currency battle, the Dollar doesn't look so strong recently!

When you compare the U.S. Dollar to Gold and Silver over the past 30-days, the clear winner in the currency battle is not the U.S. Dollar, despite it moving higher of late. As you can see from the chart above, the US$ has lost around 6% to Gold and around 10% to Silver!

The Power of the Pattern shared a couple of days ago that the Gold/Dollar ratio was turning up, despite recent strength in the Dollar! (see post here).



Silver ETF (SLV) is facing a trio of resistance at (1) above. If it can break above trio, flows towards Silver could really pick up and keep Silver as the leader, when it come to the currency battles of late!

Full disclosure...Members are long the metals complex due to this strength and Gold/Silver breaking above channel resistance last week.



Short Doc Copper/Long Silver continues to pay off!



 The Power of the Pattern shared 9-days ago that a set up was in play to Short Doc Copper and Long Silver. The upper left chart were the conditions in play on 1/13.(See post here).

The lower right chart is an update to this pattern, reflecting a breakout in the ratio. The ratio is heading higher, due to strength in Silver and weakness in Copper.

The spread between SLV and JJC over the past 9 days is around 8%.