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Commodities Comment Archive  [adbox-upper.htm]

Buy Signal (5/19/01)
Buy signals from configurations like this are extremely bullish, normally. There's resistance at 4100. The PPO buy signal from neutral territory suggests that will be broken and the index will break out of that reverse head and shoulder bottom. Inflation! Thanks to Dr. Greenspurts.  

Critical Juncture (5/7/01)
The intermediate up phase is hanging in the balance. 

Watch This One (3/24/01)
This index got down to the 52 week moving average on the weekly chart, and has formed at least a minor low here. Downside price objectives were also met. 

Once again, inflation fears are building with central bankers flooding the monetary system with liquidity. This chart will tell us whether those fears may be realized. At this point the action looks like part of a major top, with more backing up first. The 3900-3950 area is critical. There's resistance there, and it's also the short term upside objective. Base building at that level would be an argument for strengthening inflation, at which point you'll probably want to lighten up on that big stash of bonds.

On the other hand, there's no real portent of strength here, so until there is, the deflation argument, though slow to unfold, continues to have the upper hand. As always, keep a close eye on this in the weeks ahead. The chart will tell you what's going to happen, way before the pundits have any idea.

The tug of war continues. Go Team Go.

Deflationary Death Spiral (3/14/01)
The commodities are breaking down from a seven month long top pattern. The final baseline is 3757. Once that gives way, the bear market in commodities will join that in stocks in a worldwide wave of deflation. Look for a bounce first.

Intermediate Cycles Bottoming (3/9/01)
The commodities run in somewhat elongated short term cycles, compared to stocks. A seven and twelve week cycle have recently been dominant. There's also an 18 week cycle which has been quieter recently. 

All of them have turned up in the last week, but it hasn't been enough to overcome the topping out of longer term cycles. If there's not a stronger push to the upside in the next week or two, its a signal that deflation is gaining on us. With all the gas the Fed is pouring on the fire it's a miracle that inflation isn't exploding. But that analysis is  beyond Dr. Stool's minimal expertise. 

Dr. Stool follows this index because he thinks it tells us more about the direction of the overall level of worldwide demand for everything, and tells us sooner, than anything else. And that tells us a lot of what we need to know about the direction of stocks, right? 

Short Term Reaction (3/7/01)
Lots of resistance just  overhead.

Key Test (2/20/01)
This index is testing a key support area. The indicators on the daily chart are suggesting that support will break. If it doesn't, the implication would be that the inflation argument is beginning to gain the upper hand. Keep an eye on this over the next few days.

Update 2/28: the first key support has broken down. The inflation fears look phony.

No Traction (2/11/01)
The inflation argument has not gained traction in the commodities. Momentum remains weak, and short term oscillators became extended quickly in the rally. Economic contraction is reducing demand. 

Smoke, but No Fire (2/6/01)
The two day wonder rally failed to gain traction. The rolling over of longer cycles rules. As a matter of fact, that rally looks to Dr. Stool, like rigor mortis settin' in.

The longer term indicators still say top. Dr. Stool expects this top to break down in the weeks ahead as it becomes more and more apparent that nothing the Fed does can stimulate demand. The entire investing and consuming universe is overbought, and there's no way out but down.  

Spike!(2/3/01)
This two day rally has some of Dr. Stool's fellow bears thinking inflation. Dr. Stool disagrees. While the price action has been dramatic, Dr. Stool sees signs this is a short squeeze that will run out of fuel quickly. The measuring objective is 4280, there's a ton of resistance between 4250 and 4280, and momentum based oscillators have barely budged. Odds are, the commodities are building a huge top, with no upside breakout likely.

No Traction (2/11/01)
The inflation argument has not gained traction in the commodities. Momentum remains weak, and short term oscillators became extended quickly in the rally. Economic contraction is reducing demand. 

Smoke, but No Fire (2/6/01)
The two day wonder rally failed to gain traction. The rolling over of longer cycles rules. As a matter of fact, that rally looks to Dr. Stool, like rigor mortis settin' in.

The longer term indicators still say top. Dr. Stool expects this top to break down in the weeks ahead as it becomes more and more apparent that nothing the Fed does can stimulate demand. The entire investing and consuming universe is overbought, and there's no way out but down.  

Spike!(2/3/01)
This two day rally has some of Dr. Stool's fellow bears thinking inflation. Dr. Stool disagrees. While the price action has been dramatic, Dr. Stool sees signs this is a short squeeze that will run out of fuel quickly. The measuring objective is 4280, there's a ton of resistance between 4250 and 4280, and momentum based oscillators have barely budged. Odds are, the commodities are building a huge top, with no upside breakout likely.

Equilibrium or Indecision (1/26/01)
What happens in this index now is so important to the future of the civilized universe that the market has been paralyzed in fear and indecision. What will it be, inflation or deflation?

In terms of cycles, we're due for an up. But there's no sign of that. As all cyclicians know, when the time for an up is right, and the up does not appear, or is weak, the big dump lies just over the horizon. Stock Proctology interns should keep you eyes peeled here, as the implications for stocks are big.

CowBoom! (1/19/01)
Oww, what a whipsaw. The prior call looks wrong, and Dr. Stool is temporarily withdrawing his concession. However, Based on Dr. Stool's long term PPO (Proprietary Proctoscopic Oscillator), he continues to diagnose this pattern as a major top. He doesn't see more than a retest of the high.

Sell Signal(1/18/01)
Dr. Stool sees short and intermediate sell signals on stochastics. Watch what happens at support in the 3950 area. If it collapses, the deflation scenario is gaining the upper hand. 

Deflation? Inflation? (1/14/01)

This index went into a short cycle up phase when the Fed fired the starter's pistol. Short term and intermediate cycles are conflicting over the next several months which is a recipe for a trading range. In the short run, the seven week cycle up phase will lift prices toward a test of the highs.

Dr. Stool believes the unwinding of the bubble will lead to economic decay and deflation. The public has clearly turned away from its spending orgy of the last couple of years, and will now be in a savings and debt reduction mode. The corporate sector will not be able to service the debt it built up in the capital spending bubble. But the risk is that the fed will over-inflate in an attempt to stimulate an economy that can't be stimulated. That's the hyperinflation scenario. (Scroll down to chart) 

Stepan N. Stool PH&D