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, Zignals.com the free stock alerts, market alerts, and stock charts website
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What holds for Copper prices?

What goes for copper, goes for technology stocks (and global markets as a whole). After what looked to be a triple top for the commodity in 2007, the ever weakening dollar helped push an upside breakout of $375.

Broadening wedges are hard to define; upper and lower boundaries which help contain price expand with time, disguising future price developments which may hold greater near term significance. If this is what's at play then a move back to $250 would appear the best case for the metal.

However, as long as $375 holds (which it has so far managed) then a run-of-the-mill breakout is to hand, with a projected target closer to $500 than $250.

U.S. election years are traditionally viewed as bullish for the market; a change in the guard brings fresh ideas and a brighter outlook. However, the previous two have been anything but. The current protracted Democratic nomination isn't helping given it's only the warm-up to the main event. Wall Street hates uncertainty and it's by no mean clear cut who has the edge coming into November (irrepsective of who wins the Democractic nomination).

Political uncertainty and a strengthening dollar, both painted on the background of a weak global environment, suggests copper prices are likely to fall. This can be good and bad for technology stocks; falling prices imply falling demand (bad), but given this decline will likely be attributed to a rising dollar it should help technology products be more price competitive and help stimulate a recovery which would be good for the markets.

The problem is it just might not happen until November's fight is done and dusted.


Copper breakout-support alert with 1% threshold: $371.25-$378.75
Copper upside target alert with 2% threhold: $490.00-$510.00
Copper breakdown alert target with 2% threshold: $245.00-$255.00

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

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