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#1 Cuthbert Calculus

Cuthbert Calculus

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Posted 27 February 2008 - 01:59 PM

http://commoditywatc...ng-and-dr-bubb/

Enjoy

#2 DrBubb

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Posted 27 February 2008 - 02:26 PM

http://commoditywatc...ng-and-dr-bubb/
Enjoy


In the interview, we discuss the charts in the CHART POINT thread, which will be copied below:

A TURN OR A BREAK IS COMING - and we should know this week.

I'm betting on a breakout in commodities:
+ Oil is stabilising near $100, and may be headed towards $120 or more,
+ Gold looks set to shoot up to $1,000, and may keep going
+ Copper is headed towards a retest of the highs
... but the key to it all is the US currency:
+ The Dollar could breakdown and slide in a precipitous way

Let's look at the charts:

CRB
Posted Image
CRB:
With such a powerful move up, there is huge momentum. And moves like that almost never terminate on big momentum pushes. At a minimum, I would expect the current highs to get retested. So, yes, the market may pull back briefly from Friday's close - a crossingpoint for trendlines. But IF we see a pulled back, I expect fresh highs.

WTI Crude Oil
Posted Image
WTI:
Oil (crude and products) is the biggest part of the CRB, so it is important to look at Crude, as a key driver of the CRB. Again, we have seen a powerful move upwards. WTI is now in the upper part of the channel. Have a look at the Slow STO (stochastic) in the lower part of the chart. It has just turned up, and I would expect that it will need several more weeks (or months) of upwards momentum, before it can put in place an important top

Gold
Posted Image
Gold:
The current rally to $950 looks very different than the 2006 rally to $730. That rally "went parabolic" at the end. Gold is moving in a nice orderly channel now. It has not "gone parabolic" yet. What I find is that price moves can go on for a long time when they stay in orderly channels. Not only does this one look orderly, but it is also "riding the twin rails" (ie the blue upper Bollinger band, and red 11 week MA are nearly sitting ontop of each other), and moves like that tend to continue until a price move either:
+ breaks below the twin tracks, or
+ goes parabolic.
If we see a move to Gold $1,000, and it is orderly enough, it may be set to continue.

Dollar
Posted Image
USD:
This is a very interesting chart. Both Wood and Barbera are looking for a dollar rally from here. Indeed, they have been talking about a possible rally to USD-78 or higher for some time. We've seen that once already, and a classical "C" wave, if we see such a pattern, would tend to take the dollar back up to USD-78, or even higher. But we may not see that. Another plausible pattern would be an immediate breakdown in the dollar - a preciptious slide under USD-74.5, as the dollar moves down to fresh lows.

Either scenario is possible. I favor the dollar slide scenario, and here's why:
Basically, with the US economic fundamentals in such rotten shape, there will be huge pressure on US authorities to keep rates low, and possibly push them lower. The market understands this pressure, and has been selling the dollar in anticipation of of more rate cuts, and other governmental stimulus. In essence, the weaker dollar creates demand for US products, because they are cheaper for foreign buyers.

Also, there are many reluctant holders of dollars, like Foreign Central banks (and their Sovereign Wealth Funds), and they are continuing to look for ways to lighten up on their dollar exposures. So it will take some enormous buying in the dollar to lift it (even briefly.) Who is going to be brave enough to buy the dollar, when tehre are so many weak holders out there?
The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix




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