Are Commodities Ready for a Corrective Dip?


The following are the latest daily summaries of my ongoing intraday coverage, providing context to interpret price action. Any prices listed are for a contract's current "front month." Their direction tends to correlate with any ETFs listed for each.

Today's Highlight: It's probably too early for gold to extend its recovery, unless this has been only a temporary corrective bounce. That didn't stop it from trying, and crude oil seemed to come along prematurely for the ride. If a a corrective dip is coming anytime soon, then it should be obvious by no later than Wednesday's open.

Dollar Basket
Friday's reaction down from the 82.80 bounce limit extended down sharply Monday to fresh lows at 82.10. Any lower would continue targeting 81.80, but closing back above 82.45 could now end the pullback.

Jun Contract EC; (NYSEARCA:FXE)
The door still remained open to a rally, and Sunday night compensated for the delay by gapping up above Friday's 1.3040 high and rallying sharply up to 1.3120. Back under 1.3065 would start to signal momentum reversing down. Otherwise, the rally's momentum remains intact.

Apr Contract GC; (NYSEARCA:GLD)
While Friday's volatility suggests that ultimately the recovery intends to continue, a deeper pullback first became likely. That didn't prevent Sunday night's double-digit rally back up toward 1478.50. But the balance of the session ranged narrowly sideways, forming an inside day, that remains more vulnerable to reversing back down next.

May Contract SI; (NYSEARCA:SLV)
Monday's gap up ranged sideways under Friday's highs, dipping back to the rally's original 24.20 target (basis Jul, 2415 basis May).

30-year Treasury
Mar Contract US; (NYSEARCA:TLT)
Monday's narrow ranging around Friday's high got up to 149-05, but ultimately failed to extend any higher. There remains potential up to 149-14, so long as 148-16 were to hold support. And now the sell signal can be raised from 147-26 up to 148-06.

Crude Oil
Apr Contract CL; (NYSEARCA:USO)
Although Friday's dip to 92.05 ultimately recovered enough to maintain the rally's momentum, its immediately resumption wasn't likely. It resumed immediately anyway, probing fresh highs Monday testing 94.70. Avoiding any near-term weakness back under 93.25 to signal momentum reversing down would instead target 95.30 and 96.00.

Natural Gas
Friday's recovery from its deep intraday dip kept open the same setup that any initial strength Monday would be likely to extend sharply higher intraday. The open gapped up sharply, itself, but still extended from 4.30 to attack 4.40. This leg has potential to 4.48 and 4.53.

Editor's note: Rod's analytical techniques are designed to efficiently identify targets and turning points for any liquid stock or market in any time frame. He applies his techniques live intraday, primarily to S&P futures, at RodDavid .com .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Commodities

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