the bloodbath continutes....

K

krazykarl

parabolic move up led by commoditites -

parabolic move down led by commodities -

i'm more curious to see what piece of data will cause commodities to level-off or perhaps reverse. Infflation should be causing gold to go up. Demand should be causing industrial metals to go up. profit taking destroyed both material markets last week, but it should be over. anyone care to call dow 10950?

discussion welcome...
 
Quote from Ivanovich:

Curious, but why do you feel profit taking in metals must be over soon?
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i don't think it will be over soon: i think profit taking was the catalyst in this down-trend, and I do feel that the sell-off in commoditites is reversing the overall trend of the market.


I see two things playing out:

-With the above thesis, I think we are seeing a momentum move down, which means that the market will overcomponsate the downward move.

-The market is pricing in a 500 basis point rate-hike by the fed. I think it will be one-and-done, but that one will be 0.50 %.


-kk
 
The speculation premium in the commodities means they have further to fall. The prices of metals do not reflect the supply demand. I think BarCap in the FT was saying there is up to a 30% pure speculation premium in these markets from hot money. Gold has been latched onto by retail investors and is simply a speculation vehicle making inflation/price analysis difficult. Once the weekend papers say buy gold you know it's time to get short. Commodity and equity flows into bonds have been strong recently. The tnote yield fell under 5% today despite hawkish tones for more hikes. Cash is king as long as it's not the USD.
 
Quote from krazykarl:

i don't think it will be over soon: i think profit taking was the catalyst in this down-trend, and I do feel that the sell-off in commoditites is reversing the overall trend of the market.


I see two things playing out:

-With the above thesis, I think we are seeing a momentum move down, which means that the market will overcomponsate the downward move.

-The market is pricing in a 500 basis point rate-hike by the fed. I think it will be one-and-done, but that one will be 0.50 %.


-kk
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I think there is no way in hell the Fed will be pulling a 50bp rate increase.
 
I have seen several posts concerning commodities leading the market higher or lower. It's been my experience that commodities and equities move inversely to one another. Certainly energy stocks get boosted by commodity prices etc but equities in general are hurt. This is all on a longer term time frame than daily and weekly charts. This is yearly type stuff. Example: The commodity run up began in 1998-1999 when equities were at their highs. Equities overall since that time have been flat to down. We have just experienced a 3 yr bounce off of the lows that brought us to back to the very recent highs, but this is just a bounce in my view. I would say that the commodity run up will continue , including corrections of course, for another 8 to 10 years. What this means is that equities will languish for that time period, with bounces etc.
 
Why do you say "bloodbath"? I never understood why falling markets are considered bad and rising good. I guess it's that the average trader/buy and holders is so reluctant to short. Prices go down twice as fast as they go up. There was crazy money to be made during the last 10 sessions on the short side.
 
Quote from bigmrfrank:

Why do you say "bloodbath"? I never understood why falling markets are considered bad and rising good. I guess it's that the average trader/buy and holders is so reluctant to short. Prices go down twice as fast as they go up. There was crazy money to be made during the last 10 sessions on the short side.
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no, i agree with you. i have a better record trending up then i do down, so it was a bloodbath for me. :cool:

i'm still a 14-month-old here.... :cool:
 
Good job, you guys called the bottom of the correction yesterday. Every single pundit on TV keeps saying that commodities are in correcting mode right now. My friends who know that I trade are calling me and telling me to short gold. I have a feeling that the commodity markets are going do to the opposite of what every one expects them to do. Everyone expect there to be a deep correction right now that lasts a three to six months and that all of us should wait for it then jump on the commodity bandwagon. I have feeling the markets are going to throw a curveball.
 
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