Gold, Grains, and General blah

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The chart above is of GLD which is an equity/ETF tracking gold prices. Today gold prices made new highs for the month modestly exceeding the highs from several sessions ago. However, the closing price was below those prior highs. For those wanting to see a continued advance in gold, this is a warning sign that buying interest at new short-term highs may be waning. Also, there is a strong RSI bearish divergence in the recent peaks. Watch the trendline of the RSI indicator over the next several sessions. Most times this trendline will break in advance of prices breaking the same trendline and can give another early warning that the trend is ending. I checked the continuous futures chart of gold prices and the analysis is the same as on the ETF. Also the MACD indicator is in a historically overbought region.

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This chart is DBA which is an ETF that is composed of soybeans, corn, sugar, and wheat. Like most commodities, it has fallen sharply this year. I have looked at the most recent commitment of traders data and the configuration for the underlying commodities is similar across the board and it shows the commercial traders (typically smart guys) buying these commodities to an extreme level. Also, speculators have greatly reduced their positions which is good from a contrarian point of view. I would interpret this as a bullish set-up for a trade on DBA. The problem now is that the short term technicals are overbought. Interested traders may be wise to wait for a pullback on short-term indicators before considering a trade.

Short-term models for the S&P and Nasdaq are basically neutral currently. It would be nice to get both those models to an extreme one way or another soon to set-up another index ETF trade. I am almost equally willing to take bullish or bearish trades at this juncture, with a slight bias toward bearish short-term trades due to many factors discussed in recent posts.

Pete