The Technical Situation in Commodities (and the negative implication for inflation expectations)

Using the multi-panel charts from the NFTRH Commodities segment we see a broken situation on the daily view. Crude oil clings to its uptrend as does the Uranium holder. But these two are not so much inflation signalers as followers of their own supply/demand fundamentals and in the case of oil, a hell of a lot of manipulation by producing countries and regions.

crb

The weekly chart shows the breakdowns as something serious in IM and Copper because the post-2016 trends are being broken. CRB meanwhile, is losing its moving average support.

crb

Here, get a look at copper’s weekly chart. I cannot reasonably tell you that I called 2.70/lb. copper because I didn’t do it publicly. I did call it to one inquiring friend, however. That would be Mark at IKN after he questioned the technical status a few weeks ago. The answer was that it’s got a good chance of a swoosh down to 2.70. Well, boink. Any short-term bouncing aside, copper has formidable resistance now at 2.95.

copper

Taking a look at CRB tracker DBC (weekly), we have a real mess here. There’s the broken trend line and lost moving averages. This is happening within the context of the uptrend from early 2016, when gold led the entire raft of ‘inflation trade’ items, including many stock markets. While the rally may remain intact, that is a long way down to the lower channel line and I don’t like it if I am a commodity bull.

dbc

Of course, nothing’s ever easy in this racket. What on earth is the Baltic Dry Index doing signaling a positive divergence to commodities and global equities? Maybe it is just signaling a bounce from the current oversold conditions.

baltic dry index

Regardless, crude oil is at the underside of its $10/barrel resistance range.

crude oil

And industrial metals may have already topped (short of our ultimate target).

gyx

All in all it’s an ugly near to intermediate picture for all but fancy traders who may play a bounce. The narrative that these charts seems to be promoting – especially with long-term Treasury bonds still contrary bullish by sentiment and CoT data – is a continued near-term decline in inflation expectations followed down the road by another inflationary phase. That trend channel on DBC above, is especially creepy.

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