COMMODITIES MAKE IMPRESSIVE COMEBACK FROM YESTERDAY'S SELLING -- GOLD CLEARS OVERHEAD RESISTANCE -- GOLD SHARES BOUNCE AS WELL LED BY GOLDCORP, YAMANA, AND KINROSS GOLD
ALL COMMODITY GROUPS REBOUND... While global stocks are trying to stabilize after yesterday's selloff, commodity markets are making a decent comeback. Chart 1 shows the DB Commodities Tracking Index Fund (DBC) bouncing off its (blue) 50-day moving average. Chart 2 shows the DB Energy ETF (DBE) doing the same. Base metals have been the strongest commodity performers of late. Chart 3 shows the DB Base Metal ETF (DBB) bouncing off its 200-day moving average (red line). The weakest commodity group over the last month has been agriculture. Chart 4, however, shows the DB Agricultural ETF (DBA) trading above its 50-day line after finding support at its 200-day average. Big gains in corn and wheat are largely responsible. Precious metals are also having a good day.
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Chart 1
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Chart 2
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Chart 3
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Chart 4
GOLD LEADS PRECIOUS METALS HIGHER... Last Wednesday's message wrote about potential bottoming action in precious metals. Chart 5 shows Silver iShares (SLV) trading sideways since mid-May after a steep price decline. The sideways price action since then has the look of a potential bottom formation. Its proximity to long-term support at its 200-day average is also encouraging. SLV is now trying to break through its 50-day average. Gold has been much stronger. Chart 7 shows the SPDR Gold Trust (GLD) breaking through resistance at its June high. That puts bullion very close to a new all-time high. Part of gold's appeal is that it's a traditional safe haven in times of financial stress. Gold is also viewed as an alternate currency. Yesterday's plunge in the Euro may have driven some currency funds into gold.
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Chart 5
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Chart 6
GOLD STOCKS ADVANCE... Last Wednesday's message showed the Market Vectors Gold Miners ETF (GDX) climbing above its 50-day line and in position to challenge its 200-day average. It also regained its January low which was broken during June. The relative strength ratio (below Chart 7) shows that gold stocks have among this year's worst performers. That may be changing as shown by the recent upturn in the RS line. Three gold leaders shown last week have also held up very well. Chart 8 shows Goldcorp (GG) trading at a new two-month high. Chart 9 shows Yamana Gold (AUY) climbing impressively as well. Both gold stocks are trading above their 200-day averages. Chart 10 shows Kinross Gold (KGC) in the process of challenging its 200-day line.
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Chart 7
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Chart 8
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Chart 9
