The Next Big Move

After oil accelerated from near zero last year, it reached $85 for the first time in 7 years. A few things are really interesting on the chart. I would have expected the purple relative strength to have a lot steeper slope. The second interesting point is that the PPO showing momentum is currently making lower highs but is at the trend line now.

It has been an exceptional run. The real question for everyone now is can new money go in here? All of the inventory tightness conditions are still in play, and perhaps we can add more there. In my opinion, it seems a tough trade.

Other commodity areas that are starting to improve include Corn, Soybean and Wheat. These charts are breaking out of their respective trend lines.

I also like the precious metals here. Both of these charts are breaking their weekly downtrends. I have been covering the precious metals trade for three weeks already. There would appear to be lots of upside as it breaks out to the North.

As nice as crude oil looks, these five other commodity charts also look like they have some significant upside. I like the idea of buying into the start of the next move, rather than playing catch up with the last move. This is especially true in Commodities. While I don’t think the oil trade is over, I think these other ones have less downside risk and more upside.

Good trading,
Greg Schnell, CMT, MFTA