Regarding the commodities market, would this be the correct way to analyze the current situation?
On the PrefChart chart we see that Energy and Livestock commodity indices as the top performers. However, all three major commodity indices (CRB, CCI and GSCI) are below zero, which suggests that investing in commodities is not a good idea at the moment(?). If this does not rule out commodities then:
Should we look closer at the Energy commodity sector we see a Stage 1(?) breakout pattern unfolding. The negatives are that there is potential resistance at 390 after the initial breakout of 351 and that the SP500 relative strength is still negative but sloping up. relative strength to GSCI is positive as can be seen on the prefchart.
Looking at the commodities within the energy commodity sector we see that RBOB Gasoline making a potential head and shoulders pattern. However, if prices close above 3.36 it could be a continuation move(?) if all other indicators are in agreement.
Brent Crude Oil has a while to go but if the resistance at 117 is broken it is a buy (could wait for a close above 120 for confirmation) if all other indicators agree.
Crude Oil broke out of a triangle formation 2 weeks ago, which would have been a buy signal since the relative strength to SP500 and GSCI went positive and the volume was above the 52 week EMA, 30WMA was sloping up and cumulative volume gave a buy signal. It is currently making a pullback on the daily to its breakout level.
Heating Oil is rising towards its long-term trendline. If this trendline is broken with a decisive move, volume and positive RS, heating oil could be a potential buy.
Natural Gas has been in a very long downtrend. It has formed a trendline just recently (three touches). 30 WMA is flat and the SP500 and GSCI relative strengths are negative. If the RS turns positive on the break out 4.6 with volume, natural gas would move into stage 2. If the trendline is broken, then it is a Stage 4 continuation move(?). I would also like to add that the volume formation favors an upside move.
I have just read Stan Weinsteins book and am a little confused about analyzing commodities.
