There have been a couple of top extensions in some commodity indices that we follow in recent days. This comes after a string bounce in prices since low points in late March and early April following the ‘Covid sell-off’ in February and March. That bounce has now reached levels where we might expect another bout of weakness, which is what we expect:
This fits with our general theme of a change in market weather coming now – a stronger US dollar, a dip in stocks and the end to the rally in grains (see the last edition). There have also been some commodity compressions that have formed and broken down, which argues a new downtrend starting now:
This looks as though the weakness may be general in commodity markets, but we would still beware selling those that have been pushing at their recent highs, such as Coffee and Cotton. You should now start to sell some others though, such as the Corn and Soya markets, Energy (but not Nat Gas) and Sugar.
All signals courtesy of software supplied by our friends at Parallax Financial Research www.pfr.com
