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The charts, graphs and comments in my Trading Blog represent my technical analysis and observations of a variety of world markets...
* Major World Market Indices * Futures Markets * U.S. Sectors and ETFs * Commodities * U.S. Bonds * Forex

N.B.
* The content in my articles is time-sensitive. Each one shows the date and time (New York ET) that I publish them. By the time you read them, market conditions may be quite different than that which is described in my posts, and upon which my analyses are based at that time.
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* From time to time, I will add updated market information and charts to some of my articles, so it's worth checking back here occasionally for the latest analyses.

DISCLAIMER: All the information contained within my posts are my opinions only and none of it may be construed as financial or trading advice...

Dots

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Tuesday, March 05, 2013

Commodities Set to Join the Party?

I wrote about the Commodities Sector ratio of DBC:SPX here on January 20th. DBC had been underperforming the SPX, essentially, since mid-2011 and was in a large triangle formation on the Weekly timeframe.

Since then, it has weakened further to make a lower low and has broken below triangle support, as shown below on the Weekly ratio chart of DBC:SPX. There is a slight positive divergence on the Momentum indicator, but it has not hooked up yet.


DBC has also made a lower low in a downtrend in between the Weekly 50 sma (red) and 200 sma (pink) below a major support level of 27.47, as shown on the Weekly chart below. Of note is last week's volume spike and this week's bounce, thus far.

The AUD/USD forex pair is also in a downtrend on the Weekly timeframe, as shown on the chart below. It has bounced this week from a major support level at 1.01 and is trading just below major resistance at 1.0274-1.03ish.


Three charts to watch to see if momentum begins to rally on the DBC:SPX ratio to, potentially, signal that the Commodities Sector is set to join in on any further equity rally...particularly if DBC can rally to and hold above 27.47, if AUD/USD can rally and hold above 1.03, and if DBC:SPX can rally and hold above triangle resistance at 0.019.

Otherwise, we may see considerably more weakness in the Commodity sector, and possibly, in the Aussie $.