Somebody please remind the commodity market that it left a 3-year cycle low behind nine months ago. After a 3-month surge out of that low, commodities have stumbled and continue to set a series of lower highs and lower lows.
In fact, seeing a 6-month downtrend materilize so early in a 3-year commodity cycle is divergent from bull market behavior. A healthy 3-year cycle should produce an initial uptrend lasting a year or more. A multi-month pull-back would then separate that initial rally leg from a second, accelerated rally.
Furthermore, commodities currently have the benefit of huge counterfeiting... err, money printing programs courtesy of the FOMC and BoJ. With both a compelling technical backdrop and plenty of fuel for the fire, the lack of muster from this sector must be quite worrisome for commodity bulls.
Ultimately, only a drop below last year's 3-year cycle low can deliver bearish confirmation. In the meantime, however, commodities should get at least a temporary lift from precious metals which, as described in the Member Letter, are set to bounce out of an important low.