Blogs

WTI CRUDE MAY BE READY FOR A BOUNCE

Much has been made about the crunch in the price of crude oil. The weekly chart of WTI Crude (continuation) shows an interesting situation with RSI down at 11.1 compared to 21.7 when it was bottoming in December 08/January 09...this is a massive oversold situation. However, when you look at the size of te formation above the violated red support line, you can't help feel that it is big enough to push price below the 431 recorder in January 2009.

US DOLLAR INDEX SHOULD NOW CORRECT ITS SIX MONTH ADVANCE

My blog on the CRB Commodities index last week concluded that the decline from its June high was probably terminating after its 15.5 percent decline. Today I want to talk about the US Dollar Index because it has risen 11.4 per cent from its May low and has been the main reason for weakness in commodities. It would be safe to say then that if the CRB Index was oversold and ready to bounce, evidence of a top in the US dollar index would lend support to the idea that commodity prices should rally.

CRB COMMODITIES INDEX BEAR MARKET COULD BE TERMINATING

Investors in commodities have taken a hammering this year...whether it's the price of precious metals,coal, oil or iron ore, investors have taken a "bath." But the worst seems just about over. At least that's what the technicals are saying. The InvesTRAC short term model shows that the OB/OS indicator has just begun to rise with the forecaster showing a rising ternd into early February.

GOLD/SILVER RATIO TO DROP: BULLISH FOR PRECIOUS METALS

Usually the direction of the GOLD/SILVER ratio is a good indication of how the previous metals should perform...when the ratio is rising then the precious metals are declining and conversely when the ratio is falling, the precious metals are rising...this is because silver usually leads gold up and down. Have a look at the ratio in the daily chart below...it rose from 62.3 to 75.1, almost 21 percent and in the process gold dropped from 1344.7 to 1132.05 (-17%) and silver fell even more from 21.58 to 15.07 (-30%).

YAHOO BACK AT ALL TIME HIGH

I do not want to say too much other than their's a tussle going on right now between those who are calling for a resumption of the bull market and others who are telling us the market is going straight dow. Now Yahoo is not necessarily a good example because with its big holding in Alibaba it might be viewed as a special case. But it does serve to highlight that the market is a a crossroads.

US DOLLAR AT START OF LONG TERM BULL MARKET

Make a note of the following: Reversal of thirty year bear trend plus an eleven year base equals major new bull market in progress. What market is this you ask? Well it's the much maligned US dollar. Take a look at the monthly chart below of InvesTRAC's US Dollar index which dates back to 1983 and you can see for yourself the major thirty year long downtrend which has been reversed...then look at the base pattern which has been building since 2003.

TBONDS PROVIDE PROTECTION FROM COLLAPSING DJIA

Back on September 2 I wrote (http://investrac.com/blog/dow-30-at-the-long-term-apex) that the DJIA had either peaked in August or would do so in September and would fall until November 2016, and for the record the high came on September 19 at 17351...so InvesTRAC is long term bearish.

TBONDS PROVIDE PROTECTION FROM COLLAPSING DJIA

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PRIVATE HOUSING CONSTRUCTION'S DISMAL PERFORMANCE

After five years into a recovery would you expect to see that Private Housing starts are only marginally higher than where they were at the bottom of previous major economic contractions? You would believe that the recovery starts would be well on the way back to previous highs. But this is not the case. Have a look...the chart of Private Housing starts goes back to January 1966 ...notice how the recovery since the low of 478 made in April 2009 has improved to 1117 in July 2014 but hardly any higher than the lows previously recorded.

GOLD PRICE SHORT TERM OVERSOLD BUT LONG TERM UPTREND HAS BEEN VIOLATED

“Gold is not worth additional capital at this point. It is oversold, but is trending poorly,” so a note from Ned Davis says...it also says that gold could drop to $660. Quick to take issue was this rejoinder from Gold Stock Bull Investment Strategies:"In the following points, I will argue the reasons why the gold market has not yet peaked. Instead, we are in a counter-trend correction within the long-term bull market." Two decidely opposite views, so we decided to look at the InvesTRAC model.