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April 21, 2008

Commodity Curiosities

Last night, as I do most Sunday evenings, I flipped through my charts to get my mind back in gear for the trading week. For some reason I couldn't shake off a bit of anxiety over silver's behavior, so I logged into my futures account and dumped half my holdings. With silver down 3% today, there is understandably a feeling of relief, even though the half I held onto is taking a nice little chunk out of my net worth. Obviously, Thursday's presumed breakout was just one big head fake. It now seems silver must suffer one of its periodic washout days before it can move meaningfully higher.

Curiously, gold is holding up today (up three bucks as I type) and appears to be the only commodity reacting favorably to the dollar's modest drop. In fact, the triangle pattern in the buck's chart suggests another leg down, which is what compelled me to build up my silver position. However, I've seen this triangle highlighted on so many blogs, it makes me wonder if I shouldn't be taking the contrarian point of view:

stock chart

Check out this monster basing period in copper:

commodity chart

More recently, copper has been consolidating a move up from $3.55 in a sideways fashion. If this trading range resolves to the upside, I think the big move could be on.

commodity chart

Finally, sugar recently broke out of a base and is now back-testing the breakout level. Interesting place to open or add to positions as the stop is very tight.

commodity chart


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