NFTRH had projected a top of some kind (whether merely corrective or terminal) in the CCI commodity index as the leaders in Agriculture were due to roll over from excessively over bought (and over hyped). We have been describing what has been going on in commodities as a good old fashioned rotation of rolling speculations with the hedgies, various other black boxes and momo’s playing the sector. There is nothing but hot air to the noted support level.
HUI Daily Technicals
HUI got above the 50 day averages and changed the daily trend by gapping up January. It then made a consolidation handle, which found support at the EMA 50 in early February. It then became gappy as aggressive buyers chased it up to its over bought state (as of yesterday).
NFTRH has been following this weekly chart of the CCI consistently for a couple months now. Still no resolution on a would-be ‘inflation trade’ featuring commodities, which may be on if CCI breaks and holds above the downtrend line and very OFF if 500 fails.
CCI Commodity Index, monthly
Here is what the equally weighted Commodity Index did on Fed Day. A hold above the moving averages changes the trend. MACD almost green.
As in ‘do or die’ support…
If commodities were on a bull instead grappling around for support the Fed would be in a box if they were to seek to promote inflationary policy against the prospect of moon-launching commodities.
Instead, the CCI equally weighted commodity index has looked like crap since the QE3 announcement. This either implies undeniable deflation is at work or a pause before a next leg up that would erupt soon.
Here’s a chart showing the support we’ve been watching in the newsletter for many weeks now. If CCI were to break below 560, the bearishness that I think is on tap for next year would be indicated NOW. Best to keep cash and put risk management first. But as it stands, CCI is above support. That’s a fact.