COT numbers

Posted by admin on Jul 13th, 2009 | no comments

Here are the latest Blees COT ratings released on 7/10/09 for some key markets. Remember “100? is the most extreme bullish position on the part of commercial traders (aka the “smart money”) for the last eighteen months. “0? is the most extreme bearish position:

S&P 500 Index: 46
S&P E-mini: 71
Dow Industrials: 0
Nasdaq 100: 65
Nasdaq 100 Mini: 26
Gold: 33
Silver: 71
Crude Oil: 49
Copper: 78
Corn: 87
Soybeans: 31
Sugar: 42
Wheat: 99
Cattle: 53
Hogs: 97
U.S. Dollar: 93
Cocoa: 69
Natural Gas: 83

Comments: Gold is still sporting weak numbers, so it doesn’t portend to higher prices. Silvers numbers continue to get better. The dollar is still high and natural gas is creeping higher. It is interesting how the DOW is now at a maximum extreme bearish.

Last year, prior to Lehmans collapse here were the COT numbers:

S&P 500 Index: 36
S&P E-mini: 20
Dow Industrials: 95
Nasdaq 100: 37
Nasdaq 100 Mini: 29
Gold: 72
Silver: 56
Crude Oil: 84
Copper: 79
Corn: 81
Soybeans: 85
Sugar: 41
Wheat: 48
Cattle: 79
Hogs: 18
U.S. Dollar: 0

Then later in October:

S&P 500 Index: 0
S&P E-mini: 2
Dow Industrials: 63
Nasdaq 100: 21
Nasdaq 100 Mini: 61
Gold: 85
Silver: 100
Crude Oil: 93
Copper: 93
Corn: 100
Soybeans: 100
Sugar: 62
Wheat: 100
Cattle: 96
Hogs: 12
U.S. Dollar: 12
Cocoa: 100
Natural Gas: 96

Or here in early feb (just prior to the march lows)

S&P 500 Index: 22
S&P E-mini: 21
Dow Industrials: 40
Nasdaq 100: 11
Nasdaq 100 Mini: 63
Gold: 41
Silver: 79
Crude Oil: 55
Copper: 100
Corn: 100
Soybeans: 88
Sugar: 48
Wheat: 84
Cattle: 81
Hogs: 26
U.S. Dollar: 38
Cocoa: 60
Natural Gas: 75

So the COT numbers by themselves aren’t always a good indicator, although it seems to be more reliable with gold and silver. But the market was taken by suprise in september when the dollar was at an extreme 0 bearish level, then soared after the collapse of Lehman.

The stock indexes were never extreme bearish prior to the meltdowns. Right now we have the DOW at zero, a pretty rare event.  Copper never got to a zero, and then the market collapsed for it as well. However copper was an even more bullish 100 prior to the March lows, and it did go up from there.

So a maximum reading of either 100 or 0 is more significant, but we also want to make sure it is confirmed by a good candlestick reversal reading and other factors. Think of it as another ‘tool’ that can tell us if the odds are in our favor, but not to use a sole trading vehicle.

A waiting game..

Posted by admin on Jul 12th, 2009 | no comments

Contrary to many other newsletters, we are not fully invested in gold and mining shares, nor do we believe that an imminent explosion in gold is on our doorstop. Of course we can be wrong – but we will take a wait and see approach rather than the ‘we have to be in or else the train will run off without us’ that many of the newsletters touted last year prior to the great metal meltdown.

Take this quote from a recent newsletter :

“Something big is coming soon and the danger of being out is greater than being in.”

The only thing wrong with this statement is there is no danger in being in cash. If a ‘big move’ is imminent, we will not miss the train, and such a ‘big move’ will see prices well over $1000.

As discussed last week there are three potential scenarios, and we have to look at the stock market as a whole because this will determine the fate of the metals.Currently we are seeing scenario 2 and 3 unfolding – which is either THE next big breakdown of the market otherwise known as Wave C(I guess you can call that the big move) or a brief and sharp downthrust followed by another powerful uprally (our more likely pick). Either way, it’s too early to tell if gld is ready to stage a real rally.

One item discussed this weekend, which I found interesting is the fate of the dollar which so many call into question. The point made was that in a fiat world – every other currency is ultimatly a derivative of the dollar. It is in nobodys interest to see the dollar trashed. More importantly, all currencies are inflating. China, even though they have grumbled about the dollar still prints more money than the US does. More importantly, not a single country is coming up with a currency that is backed by hard assets such as precious metals or commodities. Therefore without an alternative, we do not see a huge drop in the dollar. There may be volatility, but what we can see as being a possibility is a slow, orderly decline of the dollar – along with a slow orderly decline of all world currencies in relation to gold. However we believe other events, such as a flight to safety may be the fuel for golds next rise.

SHould the C wave down commence, the economic news will get much worse and the talk of a massive Stimulus 2 will become forefront. This may fan inflation fears and re-ignite gold. (that is one possibility). We believe that mood will ultimatly determine the price.

So our current stance is a defensive – neutral stance with a wait and see outlook. There are a number of formations in the markets and many analysts have cited the head and shoulders formation that is occuring. We do not yet know where the pattern will play out, and frankly it’s useless to discuss further until we have a clear indication of where we are.

Below are some charts of some of the indexes we follow and track:

Comment : Gold is continuing it’s downtrend and has an established support zone of 850-870 area. Should this support fail the Elliotwave target of 680 is a possibility. On the other hand, a reversal and break of the 96.97 mark will cause us to withdraw our bearish scenario. Although technically in a bullish disposition above the cloud charts, there are no reasons to enter long gold as far as we can see. The COT numbers continue to unimpress. What we would like to see is a steep drop followed by rising COT readings to give us a little teeth to the bulls argument.

Comment: Silver is in neutral territory still with support around 12. Should  11.64  fail then the Elliotwave bearish target is a real possibility.

Comment: We are right at the cloud, meaning a bounce could be expected soon. And right now we have a zone of support between 35 and 30.

Comment: PHO, our water index was unable to break through the cloud (observe how it hugs it beautifully). Resistance is thick, and we see this following the general stock market.

Comment: The S&P 500 is still bearish below the clouds and failed to attack it. The zone of resistance is dropping, so the trend is shaping down. Getting into the cloud though, would be significant since we may have our sharp rally to upper resistance that may be yet to some.

Comment : UNG is simply a devistated ETF, yet we are in it. What fun. As you can see we have been bounching along support for a while, and last week saw a buy warning (the only one we have right now). We expect action to be choppy for a while, since this is the time of year gas tends to underperform. But volume continues to be impressive and there is a lot of room to the upside at this time.

Comment: USO is not in good shape. However the resistance zone is dropping rapidly. This suggests that after a bottom in oil is establish we might actually approach the cloud and enter it, which may portend to higher prices.

Comment: The XLE energy ETF is pulled back sharply with oil and also has a dropping resistance zone.

We’ll post the COT numbers tommorow.

COT numbers

Posted by admin on Jul 10th, 2009 | no comments

S&P 500 Index: 37
S&P E-mini: 68
Dow Industrials: 0
Nasdaq 100: 51
Nasdaq 100 Mini: 68
Gold: 29
Silver: 65
Crude Oil: 32
Copper: 80
Corn: 80
Soybeans: 23
Sugar: 39
Wheat: 78
Cattle: 56
Hogs: 100
U.S. Dollar: 94
Cocoa: 68
Natural Gas: 77

Nothing at extreme levls, the dollar number does indicate that any dollar weakness will not be long lived. We’ll see the numbers in a better perspective this weekend, and there will be new COT numbers out shortly (these were delayed).

Monday Morning update…

Posted by admin on Jul 6th, 2009 | no comments

Due to the holidays we will be delaying the posting of the COT numbers.  We will be monitoring this along with the action in the markets to determine our course of action.

After reading and listening to several discussions – again the impact of the head and shoulders pattern in the stock market came up. Ultimatly we will have to determine how the price action translates into what scenario is unfolding. As discussed in our weekend update, there are three possible scenarios that are unfolding and we will be watching closely to see which one it is. At the moment, scenario 2 or 3 are the ones the most likely.

One interesting bit of information gleaned this weekend is that is we do see a major selloff in the market, the flight into treasuries will be more muted than before, and thus the sell off in gold, in percentage terms. We will have to be nimble and identify the period where a dollar rally loses it’s steam and the pendulum swings back in golds favor. Only with a strong rise in gold will we see the indexes taken to new highs.

Natural gas, being one of our few positions continues to waffle. This morning a smart stop was triggered, however we are not selling. Even though we sit on losses, the downside is much lower than the upside. The COT numbers are getting more favorable by the week. So we’ll keep holding.

This should prove to be a very busy couple of weeks and we will be updating frequently.

Weekend report

Posted by admin on Jul 4th, 2009 | no comments

This weeks action has been choppy. Ever since the June top Gold and Silver have sold off then bounced around in a narrow trading range. Oil has pulled back and natural gas is been waffling. Oh and we have been sitting mostly in cash. In fact our only positions now (all losing) are in FAZ, UNG and a little spec company called AXAS (a natural gas play).

We’ve discussed natural gas in a previous post, and all natural gas related investments will be held with no stops to be re-evaluated in the fall when the seasonals kick in. FAZ was a classic case of being too early. The good news is that it has stabilized for the time being.

We are not going to call bottoms or tops in the precious metals market. There are simply too many people calling for an immediate up surge in gold. Our candlestick indicator on our watch list is all over the place these past weeks. Gold and Silver are in sell mode, while potential buy signals in the miners emerged this week. Alas they are all of low reliability so there is nothing convincing about the signals The problem is candlesticks is they don’t act as good indicators in very choppy markets. This will not be the case for much longer.

So what to do? Wait and see. The COT numbers are certainly not bullish. What we will be observing is the seasonal strong period which is coming up soon:

GDX has been hanging above the clouds and so far has not been able to pierce it. So the test will really be within the next few weeks. The Elliotwave scenario is MUCH more bearish and totally at odds with the remainder of the metals community (who all pretty much see much higher prices in the weeks to next few months time frame). Currently the Elliotwave pattern calls for a decline to 680 (last years low) for Gold and below $8 for Silver.  So far they have been correct with a stairstep decline in metals. However a close above $960 will be indicative that the pattern, at least for now is not ready to complete.

If one is truly bullish with the metals, then being in cash is no big deal right now. If gold does break out, we’ll know – and there will be enough momentum behind it, at least initially that we wont get caught with our pants down. However it may not be the big launch that everyone is expecting, so in that case we’ll be out should the market decide to reverse itself. Using stops or a nice juicy candlestick reversal indicator.

The general market is offering mixed signals. SH is in a buy signal but we are not buying.  There is the potential for a Wave C decline, or another wave up to new intermediate term highs. If we use social mood as an indicator, I would say for now things are a bit tempered and confused with a short term negative bias. However, I caught this on AP:

ALL BUSINESS: Cash is king for investors

ALL BUSINESS: Investors choose cash as an asset class, which is bad for stocks

“That helps explain why Albin is cautioning against counting on a stampede out of cash and into stocks, especially after talking to his banks’ clients. They’ve been burned by the bear market and worry about having enough cash — especially those who invested in things like auction-rate securities that turned out not to be as easily accessible as they thought. Since credit markets remain tight, many are also finding it harder to borrow or raise money.

So they are clinging to their cash, especially in plain-vanilla accounts like money market funds, which now yield on average only 1.3 percent, according to Bankrate.com.

Albin has started giving a presentation to clients titled “Cash is an Asset Class.” He discusses how investors’ experiences in 2008 called into question two underpinnings of investment management — buy and hold and diversification. As a result, he sees many investors viewing cash as an important asset to have “in an environment where you need to protect yourself.”

Given a headline like this, investors will choose to remain cautious until the market does something to change their mind. My guess – that the market is going higher. I listened to a bit of the Mutualfundstore radio show (a retail investor show) that was dispensing the same advice (dollar cost average, etc). When the true bottom is in place, this show will probably no longer be on the air.  So the retail investor will need some prodding to get the market moving up again.

So based on our data and sources, these are three possible scenarios:

1 – Market breaks out to upside (June highs). This would most likely take gold and precious metals stocks up. In this case we would re-establish our positions (FAZ is the only current position that would be the loser) quickly.

2- Market breaks DOWN taking the metals down with it. Since we are in cash, the only downside is our natural gas position – and the downside is limited since gas cannot go to zero and eventually will bottom out unless we want to run out of supply. FAZ would soar.

3 – Market breaks down breifly, and perhaps violently as shorts pile on. Then massive short covering rally that feeds upon itself, drawing cash from the sidelines in (we will probably see the media cheerlead again – and would create the situation Elliotwave sees – a rally to 10,000+ before the final collapse)

Timing is key, patience is key – observation is key. Despite some short term losing positions we are holding – the cash we have to deploy would be more than enough to take into account the above scenarios. Now we must wait for indication which way we are going. More than likely the next 3-6 will give us the price information we need to determine the actions we will take.

COT Report

Posted by admin on Jun 30th, 2009 | no comments

Here are the latest Blees COT ratings released on 6/26/09 for some key markets. Remember “100? is the most extreme bullish position on the part of commercial traders (aka the “smart money”) for the last eighteen months. “0? is the most extreme bearish position:

S&P 500 Index: 41
S&P E-mini: 52
Dow Industrials: 0
Nasdaq 100: 54
Nasdaq 100 Mini: 14
Gold: 31
Silver: 63
Crude Oil: 34
Copper: 77
Corn: 76
Soybeans: 18
Sugar: 46
Wheat: 60
Cattle: 78
Hogs: 97
U.S. Dollar: 95
Cocoa: 71
Natural Gas: 73

Comment- with such a low COT score, conditions aren’t favorable for gold to rise. Notice how close to 100 the dollar is. (bullish). Oil has a low score, while gas is higher (during the ‘off’ season). The COT scores aren’t a perfect indicator, but they can be used as a ‘tool’ to help us confirm major turning points.

For example, remember last falls action. Late November (I just picked a random week) here is what the gold/silver COT numbers were:

Gold: 99
Silver: 90

What we’d like to see is gold/silver get drawn down and these COT numbers go up – that will at least signify that we are getting closer to a buying period.

Weekend update – Part 1

Posted by admin on Jun 27th, 2009 | no comments

PART I – METALS

We have been wavering with gold and silver. Currently, the decline is still in line with the Elliotwave forecast, i.e. a stairstep decline towards their targets of $680 and $8.38 respectivly. There is a chance for a very short term pop in the near future, and this has been confirmed by a buy signal this week on GLD, buy alerts on GDX. GDX has a rather convincing piercing line which is generally considered a reliable reversal signal.

GDX briefly pierced the cloud but came up convincingly (nice how the clouds behave right?). So we have a situation where the metals and metal equities could stage some sort of rally from here – but, and the empahsis is but, there is more risk with this trade than before. So although we have multiple buy signals, we may wait a little longer before deciding to enter a small position. (i.e. the 950 level in gold needs to be breached at the very least). We may post intraweek depending on how we see things.

SLV and SLW are still in a wait mode – and any pop we see may be too brief for us to want to even time it. SLV is back in neutral territory.

SLV still has short term support down until the $12 area.

OIL/NATURAL GAS

Oil is stil a wait and see mode since it enjoyed a pretty good run up and we expect it to hold or decline for the near term. We moved over to a full position in UNG because we believe the downside in natural gas is limited, but has a much further upside potential.

The price of UNG, our proxy for natural gas has leveled off – and so has volume. We know seasonally we are entering a weak period.

UNG issued a SELL-IF signal this week, however we are going to stick with our position. This are times when investing demands a little flexibility. For example DXO wasn’t a straight up trade, but since Oil declined to 40 we knew that the downside was limited because in most cases, oil below $65 was unprofitable for oil companies.

The same thing goes for gas. While the prices may decline somewhat going into July, the downside potential is limited. At the same time, fundementally the situation is changing much in the same way it changed for oil. Lower prices will mean less exploration, less drilling.  For a good overview of the current natural gas situaiton, listen to the energy section of this weeks financial sense newshour : http://www.netcastdaily.com/broadcast/fsn2009-0627-1.mp3

So patience is key and we’ll see how things evolve in the fall.

AGs

No news here. MOO posted a sell-if signal. DBA is still in a wait mode. We’ll be doing an indepth report on the ags in a future issue.

MISC

FAZ posted a sell-if signal. We expect it to flop around for a while until there becomes a decisive break to the upside. As the summer progresses we will be acessing the situation as it devleops and add more short positions to the general market.

Inflation / Deflation debate

As a side note – this is something we are monitoring and always checking on. Both sides make a compelling case, but to be the true judge one must ask what is actually occurring versus what is anticipated to occur. On one side we have money supply expansion, which is inflationary – provided it winds up in the general economy. Thus far it has not. On the other end is the massive credit and debt bubble implosion which is ongoing. Right now, personally we feel the forces of deflation are in control and not resolved. On a credit based economy, we personally have seen one line of credit cut entirely (American Express cancelled all business lines of credit accounts) and another credit card with limits reduced. This is affecting literally millions of people. With government regulation imminent and adding more restrictions to credit, the days of easy credit are over. We used to get multiple credit card offers per week, and now they have virtually dissapeared. The post office locally is cutting staff because of a massive decay in their volume.) The Obama administration is making a list of 50 citites that might need to contract in order to survive , such as what is happening in Flint, MI where it is anticipated 40% of the city needs to be torn down to ’survive’).

So we have a situation where there is increased homelessness and foreclosures and houses are being destroyed, just like in the 30’s where farmers were told not to grow food to keep prices up while people went hungry. So right now,what we see is a contraction of the economy, downsizing, huge debt, much higher savings rates, tighter credit. In other words, the fuel for inflation is currently simmering but not yet on fire.

Here is an excerpt from Van Tharp earlier this month:

Once again, we are in credit contraction mode, so it is not the inflationary bear market I once thought we were going to get six or seven years ago.  But I suspect that we’ll be in one by the end of 2009.  Gold is certainly suggesting that.

We’ll now look at the two-month and six-month changes during the last six months to see what our readings have been.  The CRB is finally bottoming.

Wow, look at the one month change in the CRB/CCI.  It was huge, almost taking the index to the June 2008 highs.  Now our reading is now showing that inflation is coming back, probably with a vengeance.  And we all know that the U.S government is printing money at a record pace.

So to sum up, there are seeds of inflation – but not yet manifesting itself. We have a lot of people predicting inflation, possibly hyperinflation. But since the above post we have seen a leveling off of gold, oil and all the commodities.

SUMMARY:

GLD is a buy again, GDX a buy alert. One may take a small 1/2 or 1/3 position in each. But given the signal and the context of the market, we will keep and eye on the price action throughout the week to see if the current mini-rally has any follow through potential. There is a chance for a brief spike up to $1080.

We’ll monitor and let you know.

Final pop?

Posted by admin on Jun 24th, 2009 | no comments

Giving the context of the recent decline in metals, we are observing the potential of a short term reversal pattern that may be developing. This *may* be a short term opportunity for a quick gain in metals and the broader stock market before the pattern completes, which might even rescind the bearish Elliotwave scenario. We are going to see what they have to say today and on Friday. Then we will examine the situation this weekend and determine the next course of action.

One possibility is to initiate 1/2 positions in GDX, SLW, GLD, SLV if they flash buy-if signals, then stay with them until a reversal occurs. This is a short term opportunity.

Further along – we will look at some short positions in the general markets as part of our special situations position.

A few divergences…

Posted by admin on Jun 22nd, 2009 | no comments

We recently discussed the current sell off in the metals, and that our charts show a little more downside possible. Going through some commentary this weekend we have come up with items such as this:

“Precious metals have declined this week, as indicated in the previous Premium Update. The sector has been falling for 3 consecutive weeks, since the beginning of June, and that alone suggests that at least a breather is to be expected. Still, there are many factors that suggest that a bottom has already been put this week.”

“Gold broke down and went into decline, as predicted in the last update posted early this month. At that time our maximum downside target was the strong support in the $880 area, but now there are strong signs that the decline has either run its course, or is close to having done so, and that a breakout to new highs may be close at hand.”

“We are believed to be at a good entry point for silver here as the overall pattern is strongly bullish, and the predicted reaction of the past few weeks, which has served to unwind the earlier overbought condition, is now thought to have run its course.”

These gentlemen are respected technicians, and after all they called the top a few weeks ago (just like we did). So mark a notch that we have some indicators that a bottom is at hand or close.

However the divergence is within the Elliotwave camps:

“So far, silver has been unable to mount any serious bounce from within the $13.65-$14.25 support range. Regardless, the main trend continues to be down and prices should eventually work lower. The next potential target surrounds the $13.00 level, which is where, next week, prices would intersect the up-sloping trendline drawn off the October 2008, April 2009 and May 2009 lows. As you know from our discussions, there is much greater bearish potential. Only a very unexpected rise above $15.58 basis spot, would force us to reassess the bearish case.”

So what to do? Picking tops and bottoms are not an exact science. However you can observe conditions and make a judgement that the odds are more in your favor now, than lets say – a few weeks ago. This presents a conundrum since we have two squarely seperate camps.

Last week on FinancialSense (www.financialsense.com) they held a gold round table which also had divergent views. So given the conflict of information our set up will be like this:

- Follow and observe the candlestick signals on our watch list. If a BUY-IF is triggered, we may enter a position mid-week should the signal still be in a confirmed state (and maybe scale in by a third). If the price targets reach the levels that the Elliotwave folks see as rescinding the scenario, then we’ll continue adding.

So leave it to the indicators to tell you that a meaningful reversal has taken place. You wont be left at the station, but a cautious approach will limit risk should the optimistic scenarios play out.

GLD was the only metal related security that triggered a BUY-IF signal, albiet a weak one though. Price action this morning suggests a decline, so we’ll monitor it closely. Everything else we’ll have to wait the week to determine if the price actions sets up any buy alerts.

Weekly Update

Posted by admin on Jun 21st, 2009 | no comments

Over the past few weeks we made a good call on some key markets, most imporantly gold/silver/oil – in that we exited our positions right near the intermediate term top. We also took a 1/2 position in natural gas and plan to expand that position soon.

Lets take a quick look at the metals:

GLD pulled back as expected and has a current downside potential from 825-850 according to our cloud chart. The daily chart is a little higher, with 880-900 as the target. This is in line with most of the technicians we follow. We are getting a lot of cross currents as far as where gold is going. Some see the bottom coming in very soon, with an major rally imminent. Others see sideways action for a while, etc. More importantly the Elliotwave folks still see a much steeper drop, with spot gold going down to 680 (last Octobers low).

Who to believe?

We use our candlestick analysis to determine key reversal points. They are not always perfect and we need to look at the overall technical situation, along with how strong the pattern is in order to determine if we are going to wait or proceed with entering a position. Normally when a pattern is detected it will flash a buy signal or sell signal. We follow a weekly pattern and that pattern is confirmed only if the price is higher or lower at the end of the week. Sometimes it might take two weeks to confirm. We may take judgement and jump the gun, either by putting in close stops if we think a top is near, or entering  a position before confirmation. So it isn’t always mechanical, and nothing can always be – otherwise we could all make money by programming black boxes.

This week GLD flashed a buy-if signal which turns out to be a Bullish – Doji Star.

While a possible bullish situation, it also can be a continuation pattern. It is not classified as a particularly reliable pattern. So at this juncture – we wait in cash. We will closely monitor the price action over the coming days to see if gold holds through it’s various resistance levels. If we have a meaningful reversal than we may take baby steps in – or wait until the 990 level is breached. This is the level where Elliotwave would rescind, at least temporarily – the bearish scenario. There is much talk about gold taking out the 1000 level for good. If it does, it will quickly go to at least $1200. Either way if it makes a run for it, we’ll be in.

Lets look at Silver :

Silver broke throught the clouds but reversed and is now back into neutral territory. Our resistance zone is thick, so 12-13 is a likely area of support.. Again in line with most of the technicians. However once again the Elliot wavers see a much lower price (below which is in-line with the October lows. So we will keep this in mind if prices break.

However as we expected the SELL signal for SLV was confirmed (we got out well before confirmation) .

Goldstocks – Our proxy for gold stocks is GDX. Our chart shows this:

GDX flashed a sell signal as expected, and we were out when it hit 42.73 (so near the top). It’s gone down ever since and is approaching resistance just above 35, and has more support around 30. So if the bullish case were to be true, we should see a bullish reversal pattern occuring either near the top of the cloud, near the bottom or if the Elliotwavers are correct, a big drop below the cloud where price action could get ugly. So again with the equities, we are in a wait and see mode.

One of our favorite silver stocks, SLW also has an interesting chart.

Notice how it nicely hit the top of the cloud but couldn’t break through. So depending on how silver performs we’d look to see it hold near 7. And again the candlestick pattern called for a sell. We got out just over $10, since we expected the reversal and got it – but didn’t want to wait a whole week for confirmation.

Interestingly there are a lof of bullish articles on Jsmineset.com and 321gold.com. I checked back last year before the big drop in silver and saw things like ‘now is the time to buy the gold stocks’ type of articles. So bullish signals aside, we may enter but do so with utmost caution and keeping our stoplosses in place.

OIL and GAS

We entered a position in oil via the levereged oil position way back in Janaury when it was 2.88 and sold on 6/3 at 4.19. DXO has gone up a bit since then, but we got a good profit and the upside in oil, at least in the intermediate term is limited, while the downside is much higher.We also used DBE as a gasoline and oil proxy, purchased on 5/5 @ 20.63 and sold 6/17 @ 24.69.  Once we get a price reaction we may re-enter these ETF’s at a later point.

We also sold because we felt natural gas didn’t participate. And despite the bearish news, gas has been probing a bottom. Therefore we entered a 1/2 position in UNG which was officially a confirmed buy this week.

We use the cloudcharts, but we can come to the same conclusions many of the technicians are coming to. That gas is bottoming, and that the volume is now increasing. Notice how low the volume was going through the end of april, and is now showing signs up perking up. Also notice how far away from the significant resistance gas is. So while still in a bearish disposition, UNG has a ways to go before a reaction. Bearish news about supply glut have not pushed the prices down. So we will expand our energy commodity position to a full position, replacing oil with natural gas for the time being.

Agriculture

The grains have been wishy washy and we had a small loss selling with DBA (selling 26.67, bought at 27.94). We took a cautious approach by placing a half position and when the sell-signal was flashed we tightened the stop. DBA did evolve into a full blown sell and is currently at 26. So we will wait until a better setup.

In summary, the only thing we are currently bullish on is natural gas and potentially FAZ which flashed a buy signal today. We’ll talk more about FAZ later on, and discuss the other signals this week. Since we are mostly cash we can be patient and wait for things to evolve to put the odds in our favor before making any moves.