DJP – our proxy for the broad commodity complex – has broken out relative to AGG – our US bond proxy – for the first time since December of 2010. A rising commodity-to-bond price ratio is inflationary and often precedes or coincides with higher interest rates. Higher rates in turn are usually a negative for stocks.
UUP – our proxy for the US dollar – has formed a bearish double bottom breakdown at 23.75 and violated bullish support dating back to August of 2014. The preliminary downside price objective is 20.50. A falling US dollar is inflationary and often precedes or coincides with higher commodity prices. Gold seems to have gotten the memo. Oil not so much…
USO – our proxy for Crude Oil – has crashed through support dating back to November of last year and formed a bearish double bottom breakdown in the process. Falling oil prices are generally deemed deflationary and, viewed alongside recent weakness in the price of Gold, should give pause to those of you considering fresh long commodity positions.
After briefly retracing mid-month following a triple top breakout, PALL – our proxy for Palladium – has just formed a fresh double top breakout, a move that P&F chartists commonly refer to as a bullish catapult. The implication here is that, while elimination of supply at the triple top level caused prices to temporarily fall back, new buyers stepped in at those lower levels, creating fresh demand which in turn is powering prices even higher.
Forget about Gold and Silver. Palladium has been absolutely crushing it of late. As the chart above shows, PALL (our proxy for the rare metal) has just notched a new 52-week high and formed a bullish triple top breakout in the process, suggesting higher prices ahead.