Wednesday, May 6, 2009

Zignals Stock Charts: Commodities Bottomed

The collapse of commodity prices through the latter part of 2008 looks to have stabilised in the first half of 2009. A number of bullish reversal patterns are emerging in commodity price charts which may make them attractive over the coming months.

First up is Gold (GLD). An earlier update had pointed to the breakout from the bull flag but what I had mentioned was the dual reveral head-and-shoulder patterns from which the bull flag consolidation emerged from.

Whatever your aspirations are for gold it would appear $84.75 support is critical. I have a YourCall for a push to $118.69 with a stop at $84.49.

Oil has emerged from its slump although the contango'd(?) ETF, USO, has only started to show signs of life. A push to $40.27 is a possibility. I have set a YourCall with a target of $39.99 and a stop at $26.89. In reality, when oil hits $70 a barrel it will probably be time to take some profits with USO at whatever price it's trading at.

The base metal ETF, DBB, broke resistance and a triple bottom in March and is shaping a possible cup-and-handle pattern with two resistance levels; one at $14.89 and a second at $15.75. The long term target is $23.50 but it will probably take longer than a year to get there, especially as the economy is showing no signs for a rapid rebound.

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Dr. Declan Fallon, Senior Market Technician, the free stock alerts, market alerts, and stock charts website