SP GS Commodity Index

By: Ed Carlson | Tue, Dec 2, 2014
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After waiting all year for the expected year-end low in commodities, SPSGCI should finally be there (although it probably doesn't feel that way for oil bulls). Last month's low at 510 shows up as a possible low in my price forecasting model just as a monthly cycle points to a low in November (or December). The next monthly cycle high is not due until October 2015.

In the meantime, weekly cycles point to highs and lows in late January. If last week's lows are violated assume the downtrend will continue until late January. Otherwise, assume a rally into late January.
Regardless of the short term, remember that a bull market in the US Dollar means a bear market in most commodities.


Crude Oil

While US markets were closed on Thursday, Saudi Arabia blocked calls from other members of OPEC for production cuts to halt the slide in prices. Futures opened again on Friday and by the time crude halted trading it had fallen over 10% from Wednesday's closing price to end the week at $66.15.

A short-term cycle low is expected near last Friday. A break of Friday's low will target the 61.8% retracement of the 2009 bull market at 64.

A short-term cycle high is due on/near Dec 10. Once we see whether the next short-term cycle low near Jan 1 manages to hold above Friday's low we'll have a better idea whether crude oil will follow the path depicted by the broad index above.

Regardless, a three-year triangle on the weekly chart has been triggered. It measures a minimum move to 48.00.

Light Crude Composite Chart
Larger Image

 


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Ed Carlson

Author: Ed Carlson

Ed Carlson
Seattle Technical Advisors.com

Ed Carlson

Ed Carlson, author of George Lindsay and the Art of Technical Analysis, and his new book, George Lindsay's An Aid to Timing is an independent trader, consultant, and Chartered Market Technician (CMT) based in Seattle. Carlson manages the website Seattle Technical Advisors.com, where he publishes daily and weekly commentary. He spent twenty years as a stockbroker and holds an M.B.A. from Wichita State University.

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