Leading indicator faces dual kiss of resistance

kissinlightbulbCopper is often looked at as a leading indicator. Doc Copper has been hot of late! Over the past 90-days, Copper ranks third from a performance perspective (see table below) On a longer term basis, ole Doc Copper doesn’t have much to brag about.

performance3monthmay19For the past few years, Copper has been weak, losing over a third of its value. Earlier this year, the decline in Copper took it below support line (1) that had been in place for over 10-years. Now a key kiss is taking place on the underside of this resistance line!

copperfacingdualresistancemay19CLICK ON CHART TO ENLARGE

This monthly chart reflects that Copper’s rally of late now has it “kissing the underside of dual resistance” at (2) above. If Doc Copper does happen to be a leading indicator for global growth or activity, what it does at (2) could be very important. Has the rally in Copper been influenced by a rally in stock markets in China?

China represents one-sixth of the worlds population and its stock market (Shanghai Index) has done rather well this year and is up 100% since last July. The rally has taken it up to a key Fibonacci resistance level.

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Is it possible that what Doc Copper does at (2) and the Shanghai index does at the Fibonacci 61% level could tell us a good deal about global growth or lack of? How each of these handle resistance could tell us a good deal in regards to the inflation/deflation battle that continues to be in question.

Bonds have been hit hard of late, heading in the exact opposite direction as Copper. If Copper would fail to break above dual resistance, I humbly suspect bond investors would react to it in a positive way.



Gold miners ratio working on bullish breakout

gdxjgdxjuniorbreakoutmay18CLICK ON CHART TO ENLARGE

When it comes to buy and holding senior gold mining stocks (GDX), they have been a place to avoid for the past few years. The same is even more true of Junior Mining stocks (GDXJ), as its performance has even been worse over the past few years.

The chart above looks at the GDXJ/GDX ratio since 2013, reflecting that GDXJ has been much weaker than GDX, by a big percentage. This year the ratio may have created a rounded bottom and of late the ratio is “attempting” to push above resistance.

Historically, if one is to be long the miners, its usually a positive if this ratio is heading higher. Investors want this ratio to do much better than it has for the past few months, for miners to be in the “clear” and to be a buy and holder of these assets.

gdxjpushingabovefallingresistancemay18CLICK ON CHART TO ENLARGE

GDXJ remains inside of this two year falling channel. Of late it is pushing above falling resistance, which is a positive for this ETF. January highs at $28.89 looks to be the next key test for GDXJ as its pushing higher.





Commodities hitting 25-year support line with few bulls!



Just the facts….Commodities have had a rough few years!

Below takes a look a the Thompson Reuters Commodities index from 1984 to current, with Commodity Sentiment from Sentiment Trader.com applied.

commodityindexonsupportfewbullsmay12CLICK ON CHART TO ENLARGE

The decline over the past 4-years has taken this commodity index down to a support line that has been influential to this index for the past 25 years.

This long-term line now represents a key long-term test of support.

As the same time support is being test, Commodity bulls are hard to find. At this time 37% of investors are bullish commodities, which is near the lower end of levels over the past 15 years.

What assets could benefit if this support line holds?

silverlongtermattemptingbreakoutmay15CLICK ON CHART TO ENLARGE

This chart reflects the Silver has tanked over the past 4-years, falling 65% at one point in the past year. Silver hit a long-term fibonacci support level at (1) above and created a bullish reversal pattern at this key Fib line. Now Silver is making an attempt to break above three year falling resistance at (2).

This is a huge test for Silver, as its failed to breakout the past few times its hit this resistance line!

Joe Friday… For the commodity space, this is one of the most important tests of support in the past few decades. Should commodities rally off this support line, it would surprise the majority of investors!