There have been some more bottom extensions in commodity markets. We reported a weekly-scale bottom extension in a major commodity index that we follow in the August 26th edition and this made it highly likely that individual commodity markets would also produce similar signals in the weeks to follow. Commodities don’t usually move as a tightly-coordinated group for the smaller moves but can do so for the larger ones, which we identify by weekly-scale or monthly-scale signals.
The latest in this series are in Sugar, at both daily and weekly scale:
In Corn and Soybeans, both at a weekly scale:
..and a bottom extension in Gold at a daily scale. Platinum has already made a similar bottoming signal which only stemmed its decline for a short time - we still have an outstanding ‘buy’ recommendation in that precious metal. Gold and these others may now be added to the list of commodities that can be bought. There has also been a second weekly-scale bottom extension in the commodity index, which affirms our view that the price trend of commodities as a group are turning from down to up:
We don’t expect you to buy all of these commodities at once and prudent risk controls probably limit the number of long positions to a handful. We will keep pointing out any fresh signals as they arise so that you may choose which ones suit you best.
Elsewhere, we have been seeing some top extensions at a daily scale in European equity indices and at a weekly scale in various Nasdaq indices as reported in recent editions. There has also been a daily-scale top extension in China, all of which show that there is a risk of weakness in equity markets. There have been some drops in the Nasdaq and in Europe but we think there may be more to come. There is a turn due in the Dow long-term series tomorrow (this was not notified in the 29th July update) which we are watching carefully as any rally into tomorrow may present an opportunity to sell short. If this turn marks a low point instead then there may be a better selling opportunity in the weeks ahead. In the meantime, rather than updating the charts and signals that we have sent in recent editions, here is a reminder that although there is reason to be bearish of US indices because of weekly-scale top extensions, as in this Philadelphia index, there us also support just underneath the market from this compression in a value-line index that we have pointed out before.
These conflicting signals mean the situation is not very clear here in US and other equity markets and we will advise as more information comes in.