Our advice in the commodity markets has been to expect bear market rallies and we have recommended buying copper, soya and gold in the last few weeks. We have avoided energy markets as there are weekly-scale compression signals that have yet to break and so the longer-term direction has been unclear. Now there is some evidence that this rallying tendency is coming to an end. Copper has pushed back up into the price level of an old compression, which is where we expect resistance. At the same time, the commodity index that we follow has made a top extension, meaning that the rally is ‘tired’:
We would protect profits in copper and soya and get ready so start short-selling selected commodity markets, as soon as we have more evidence. It may not be necessary to worry so much about long positions in gold as there are a few longer-term reasons to think that the present rally will not stall yet, as reported in the Feb 3rd edition.