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by James Kupfer
Have commodities finally seen an intermediate-term bottom?
Position: Accumulate
James Kupfer
Mr. Kupfer is a market professional and amateur stock market commentator. Disclosure: It is likely that Mr. Kupfer has or will enter a position in any security he writes about.
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CHART ANALYSIS
Commodity Bottom Finally Here?
01/12/09 12:51:10 PMby James Kupfer
Have commodities finally seen an intermediate-term bottom?
Position: Accumulate
| For the last few months, I've been searching in vain for an elusive bottom to the massive fall in the prices of most commodities. At last, commodities have recently made a bottom that suggests that the downward move may possibly be over for now and that traders should be playing commodities to the upside. However, commodity bulls are far from out of the woods yet. |
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| FIGURE 1: CRB, WEEKLY. This may be an intermediate-term bottom for commodities, or another chance to short. |
| Graphic provided by: Wealth-lab. |
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| Looking at the weekly chart of the CRB in Figure 1, you can see a downward sloping trendline that started at the commodity peak last year. The trendline touched in multiple spots and has remained valid to date. In fact, prices just barely crossed over the trend line this week before quickly retreating. In addition to this bearish action, both daily and weekly stochastics are strongly overbought. |
| On the bullish side, for the first time since the peak in July 2008 commodities have managed to make a series of higher highs and higher lows on a weekly basis. As you can see, I've drawn two support lines based on the recent price action. Commodities are likely to correct further to work off some of the overbought levels for stochastics. After that, they may present a very positive buying opportunity with a stop at the December bottom. |
Mr. Kupfer is a market professional and amateur stock market commentator. Disclosure: It is likely that Mr. Kupfer has or will enter a position in any security he writes about.
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Date: 01/13/09Rank: 3Comment:
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