The Trend is up?

[bpcw]

A rare pattern is about to come into play. One of our key technical indicators is about to trade lower than it did during the 2008-2009 crises. This alone is a significant factor, but even more important is that if it does, it will trigger one of the critical ingredients to trigger the very rare FOAB (Father of all buys). At least one technical indicator has to trade to 12 years plus low (the longer, the better). If this indicator completes the pattern (it is very close to doing so), it will put in a 14-year low.

@SOl, would be nice to have a little clarity on the above statement. You seem to be indicating that a FOAB could be triggered quite soon. If so would this invalidate the prediction that we will get a rally and then a strong correction to new lows well below our current ones and instead we will hit a long-term bottom and keep going up to ATH's and beyond?

Obviously either way monitoring sentiment and other data will be essential as things progress.

If the above situation comes to pass, it will also fulfill only one of the requirements. You can't predetermine the dates on either MOAB or FOAB. Certain things have to fall into place, so the signal is either triggered or not. The potential of a FOAB does not invalidate the short-term outlook. It just means that if the markets follow the original long-term pattern, as a bonus, we could get a FOAB. Keep in mind that the chart posted is a monthly chart and not a daily chart

For the markets to rally in the short term, they need some sliver of good news, not a whole lot. Even the Fed just stating that while they will continue to raise rates they will be cognizant of the potential to trigger a crisis in the bond markets or force pension funds to sell shares, etc would suffice.

Thanks Sol for the quick response, that's clear!

[outof thebox]

@SOl, would be nice to have a little clarity on the above statement. You seem to be indicating that a FOAB could be triggered quite soon. If so would this invalidate the prediction that we will get a rally and then a strong correction to new lows well below our current ones and instead we will hit a long-term bottom and keep going up to ATH's and beyond?

Obviously either way monitoring sentiment and other data will be essential as things progress.

If the above situation comes to pass, it will also fulfill only one of the requirements. You can't predetermine the dates on either MOAB or FOAB. Certain things have to fall into place, so the signal is either triggered or not. The potential of a FOAB does not invalidate the short-term outlook. It just means that if the markets follow the original long-term pattern, as a bonus, we could get a FOAB. Keep in mind that the chart posted is a monthly chart and not a daily chart

For the markets to rally in the short term, they need some sliver of good news, not a whole lot. Even the Fed just stating that while they will continue to raise rates they will be cognizant of the potential to trigger a crisis in the bond markets or force pension funds to sell shares, etc would suffice.

Thanks Sol for the quick response, that's clear!

If there is an FOAB and my indicators, also confirm that the market has bottomed, then I will consider deploying my reserve stash (kept for emergencies only), Sell some of my collectibles, sell most of my Gold bullion and hit this market hard. If I lose i guess my plan to tell my boss to take it and shove it soon might have to be put on hold

[Budge]

If the above situation comes to pass, it will also fulfill only one of the requirements. You can't predetermine the dates on either MOAB or FOAB. Certain things have to fall into place, so the signal is either triggered or not. The potential of a FOAB does not invalidate the short-term outlook. It just means that if the markets follow the original long-term pattern, as a bonus, we could get a FOAB. Keep in mind that the chart posted is a monthly chart and not a daily chart

For the markets to rally in the short term, they need some sliver of good news, not a whole lot. Even the Fed just stating that while they will continue to raise rates they will be cognizant of the potential to trigger a crisis in the bond markets or force pension funds to sell shares, etc would suffice.

Thanks Sol for the quick response, that's clear!

If there is an FOAB and my indicators, also confirm that the market has bottomed, then I will consider deploying my reserve stash (kept for emergencies only), Sell some of my collectibles, sell most of my Gold bullion and hit this market hard. If I lose i guess my plan to tell my boss to take it and shove it soon might have to be put on hold

I'd keep hold of the hard assets. IMHO everything will trend higher.

[outof thebox]

If there is an FOAB and my indicators, also confirm that the market has bottomed, then I will consider deploying my reserve stash (kept for emergencies only), Sell some of my collectibles, sell most of my Gold bullion and hit this market hard. If I lose i guess my plan to tell my boss to take it and shove it soon might have to be put on hold

I'd keep hold of the hard assets. IMHO everything will trend higher.
[/quote]

I have a decent stash of the poor man's stuff. Bought it years ago when it was going for around 4 bucks an ounce.

Yeah, overall I can't see things dropping hard for too long. When I take disciplined approach I generally do well. When mess up by trying something new or I feel like its an easy score that's when I get banged up and it ranges from hard to severe. Thankfully those stupid days are mostly behind me.

https://www.youtube.com/watch?v=BKorP55 ... isBeinerts

[Budge]

Couple of charts from The Felder Report:

https://thefelderreport.com/2022/10/12/ ... part-tres/

From a fundamental standpoint, commodities are still dramatically undervalued relative to equities. This suggests that the outperformance they have seen over the past two years still has plenty of room to run. There is also the crucial fact that capital flows in recent years represent a tremendous tailwind to the rise in this ratio which, due to the long lag time associated with these trends, will persist for years to come.

From a technical standpoint, the Bloomberg Commodities Spot Index broke out to new all-time highs this year after a period of consolidation that lasted well over a decade. As Paul Tudor Jones once said, “When you get a range expansion, the market is sending you a very loud, clear signal that the market is getting ready to move in the direction of that expansion,” and the history of previous breakouts in the index confirms this analysis.

[jlhooter]

Couple of charts from The Felder Report:

https://thefelderreport.com/2022/10/12/ ... part-tres/

From a fundamental standpoint, commodities are still dramatically undervalued relative to equities. This suggests that the outperformance they have seen over the past two years still has plenty of room to run. There is also the crucial fact that capital flows in recent years represent a tremendous tailwind to the rise in this ratio which, due to the long lag time associated with these trends, will persist for years to come.

From a technical standpoint, the Bloomberg Commodities Spot Index broke out to new all-time highs this year after a period of consolidation that lasted well over a decade. As Paul Tudor Jones once said, “When you get a range expansion, the market is sending you a very loud, clear signal that the market is getting ready to move in the direction of that expansion,” and the history of previous breakouts in the index confirms this analysis.

Budge, nice report.
What are you plans short and long related to specific commodities and even some equities, if you don't mind sharing?

[Tobeornot]

Couple of charts from The Felder Report:

https://thefelderreport.com/2022/10/12/ ... part-tres/

From a fundamental standpoint, commodities are still dramatically undervalued relative to equities. This suggests that the outperformance they have seen over the past two years still has plenty of room to run. There is also the crucial fact that capital flows in recent years represent a tremendous tailwind to the rise in this ratio which, due to the long lag time associated with these trends, will persist for years to come.

From a technical standpoint, the Bloomberg Commodities Spot Index broke out to new all-time highs this year after a period of consolidation that lasted well over a decade. As Paul Tudor Jones once said, “When you get a range expansion, the market is sending you a very loud, clear signal that the market is getting ready to move in the direction of that expansion,” and the history of previous breakouts in the index confirms this analysis.

VALE is looking good on the monthly charts. What say you?

[nicolas]

Here's a random thought I just had about commodities:
AI and technological progress are deflationary forces because they tend to reduce the cost of labor in manufacturing any sort of product.
That increases profit margins.
And that means manufacturers could be able to spend more on their other costs, like energy and materials.
To put it another way, increased automation could make industrials less sensitive to commodity prices.
And that in turn could prolong the upward part of the commodity cycle, where reduced demand or substitution would normally help to bring the prices down.

[MarkD]

I made mention of this earlier in the week. For consideration check out Pring's Inflation/Deflation indicators, a ratio which I've shown below. Commodities may increase in cost but their relative impact on finished goods and services has been zilch for some time. The next leg from this six year sideways consolidation will be a tell.

https://imgur.com/VRQAXaF

[Yodean]

Here's a random thought I just had about commodities:
AI and technological progress are deflationary forces because they tend to reduce the cost of labor in manufacturing any sort of product.
That increases profit margins.
And that means manufacturers could be able to spend more on their other costs, like energy and materials.
To put it another way, increased automation could make industrials less sensitive to commodity prices.
And that in turn could prolong the upward part of the commodity cycle, where reduced demand or substitution would normally help to bring the prices down.

This is quite interesting.

[DrSven]

Is this meaning all commodities, i. e. raw materials, food… Or is there any sub-group that is more likely to profit than others?
How would trade/invest this, single stocks, etf, …?
Haven‘t much experience with commodities so far. Thus appreciate sharing your opinions.

[Yodean]

Is this meaning all commodities, i. e. raw materials, food… Or is there any sub-group that is more likely to profit than others?
How would trade/invest this, single stocks, etf, …?
Haven‘t much experience with commodities so far. Thus appreciate sharing your opinions.

Difficult questions, Sven

Also to guess at answering them depends on time frame - i.e. how long you're going to hold these assets, if you're going to swing-trade them, etc. Besides knowing when to enter positions, one needs to have a plan at exiting.

One challenge with trading commodities is that they are cyclical ... vs., say, secular revenue compounders like e-commerce, software, fintech, cloud, etc. - although prices in the latter will also go up and down, their actual businesses won't be as subject to capex etc. cycles as commodities.

Suspect fellow sub Nicolas has a lot of worthwhile insights regarding the commodity space.

For me, I like gold/silver/uranium asset accumulation at current levels. DCA (dollar cost averaging) doesn't always work, but for those three at current valuations, the risk asymmetry is quite good. Also have a bit of copper/nickel assets, not a lot. Swing-trade crude oil, but never hodl oil - personal preference.

Besides the usual technical, trend, and fundamental analysis, the commodity space lends itself particularly well to using COT data in combination with the former.

[DrSven]

Is this meaning all commodities, i. e. raw materials, food… Or is there any sub-group that is more likely to profit than others?
How would trade/invest this, single stocks, etf, …?
Haven‘t much experience with commodities so far. Thus appreciate sharing your opinions.

Difficult questions, Sven

Did not want to bore you with easy questions.

Thanks. So no one-size-fits-all answer here, that was expected.

Btw, I have been holding some Lithium stocks and one rare earth stock for a year now. And I am in Vale the 2nd time as a TI play.

[MarkD]

If I had to choose one sector in which to invest it would simply be semiconductors. Raw materials will do well but money flows to innovation. There is more profit potential in human ingenuity which has "value" added. It's been that way for a long time and I suspect that trend is never going to end.

[Yodean]

*****

i use the lumber/gold ratio as one of my leading "risk on" indicators ... 0.30 is an important support/resistance zone ... it failed breakout recently, but trying again ... looks like 0.30 will turn into support, hopefully ... this, along with usd < 115 on a weekly closing basis, are levels i am currently monitoring with more than the usual interest ...

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