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Tradable Rally in Commodities

Throughout 2014 my commentaries warned of no bottom in commodities until near year-end. Gold got an early start in November but, looking at the S&P GS commodity index, it appears the remainder of that group found a low in January. However, while this may be a tradable rally, cycles point to the bear market getting started again by later this year.

February looks positive for commodities until an 18 week cycle high comes due near the first week of March. While the index can be expected to have its ups and downs throughout the year, the trend should be up until a 22 month cycle high in October after which a 3 year cycle will begin to exert a downward pull into a low no sooner than year end (chart).

Globally traded commodities are priced in US dollars and thus are expected to price inversely to the dollar. A 40 week cycle low due, ideally, in September is close enough to the 22 month cycle high in commodities due in October to lend confidence to the forecast for a tradable rally in commodities until this fall. Last Thursday was a short-term cycle low in the dollar but the next short cycle high is due this Friday.

S&P GS Commodity Index
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The February Lindsay Report is now available at Seattle Technical Advisors.com

 

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