Click on Chart to EnlargeHere is an updated longer term view on a prior post. It puts the S&P 500 in the later stages of a large complex upward pattern that may be near completion or last a few more months. There was a minor pullback in November, but it obviously gave way to new highs.
I believe the market is once again extremely close to a significant pullback or correction. The precious metals are badly lagging the new highs in stocks. Commodities in general are overbought and could pressure stocks on a correction. Also there has been a major news event in recent days seemingly bullish for commodities, though after extended moves up. This has a distinct possibility of drawing dumb money in as the news comes out, while the smart money uses this as a convenient liquidation point in those markets. So I think the Egypt news and oil spike, etc, etc, fit nicely with the idea of a topping commodity market from a contrarian standpoint.
ok. this is just seems to be getting silly crazy now.
ReplyDeleteThe ICE margin hike on Feb. 10 set off a price surge (which is the opposite of what would be expected). What is your take on that?
ReplyDeleteclarification: referring to margin hike on cotton.
ReplyDeleteI don't know really, but it seems that it will have more impact if/when prices start to come down leading to cascading margin calls and forced liquidations. Seeing as the cotton market is overbought (as well as the general commodity board) it makes sense that this could add to selling pressure when it comes.
ReplyDeleteOn the flip side, when a commodity is at all time highs, it is free to rise and can do so explosively even if overbought.
Everything I look at suggests that whatever top occurs in cotton when commodities turn down, should be a significant one on the order of 30+% in relatively short time.