[Red1324]

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.

The $CRB and $CCI are in Stage 4, but the GSCI Commodity Index ($GNX) is in Stage 1A currently imo.

The Energy Commodity Index ($GJX) is in Stage 2A, but below key resistance still, and the relative performance versus the S&P 500 is still well below the zero line. So you'd want to see confirmation of that with a breakout above the major resistance from the last year. Gasoline looks the same in early Stage 2A imo, but within a multi year sideways Stage 3/1 range. So plenty of resistance in the range to work through.

Natural Gas depends on what you look at, as if you look at the spot price ($NATGAS) it's been in Stage 2 since last September, but is close to breaking down now. But if you look at the ETF (UNG), then it's in Stage 4 again. Which shows the great disparity between the ETF and the spot price.

Anyway, it is possible to use Weinstein's method on commodities, but we have found on here that they have much quicker cycles through the Stages and it even mentions in the book about using a faster 40 day moving average with them (page 333) because of the speed with which they move. Plus there are other factors that influence them that don't effect stocks, so you need to be aware of this when you trade them.

Thanks for the reply. My mistake was looking at the commodities from a longer-term point of view and since they have naturally shorter cycles my analysis was off. I have now added this to my notebook.

Too bad prorealtime doesn't have cci or crb.