Commodity Chart Deck #16

The Energy sector was, once again, the best performing sector over the last trading week. NatGas is still surging like there is now to tomorrow, also because the underlying seasonality benefits the liquified gas. Metals also put a good performance into the books, despite a higher Realyield. Grains are still selling off but things could change quickly once seasonality kicks in.

Here is my latest playbook:

  1. Precious Metals still looking shiny to me. Platinum and Palladium are the ones I currently like the most at their current prices. The setup just fits but I’m still waiting for the trigger to occur. I’m looking forward to an entry.

  2. Can Softs like Cocoa, Sugar, Cotton, and Orange Juice make a higher high or will we see the selloff which I anticipate when the weather in those regions stays firm? I went short Cotton last week but things can change quickly in this space of the commodity world.

  3. Can Crude Oil surge to new highs or is the top for this year already in? Because the risk to reward seems good to me, I took a long position last week.

  4. Is lumber back from the dead and continues its rally, or is it just a dead cat’s bounce? From a fundamental standpoint, there is no shortage of saws like we saw a couple of months ago. Nevertheless, the market is really illiquid and my confidence in a trade on either side is not huge.

  5. Will we see the next leg higher in the crypto space or is this the next top. Look at the 0.618 Fib retracement on the BTC chart. This is IMO a great indication of where we will go from here.

US Dollar Update

I think that the direction of the USD is still not really clear. The week before last we saw the bullish breakout and last week there was a strong selloff in the USD. Seasonality and positioning continue to suggest a firmer USD. But the USD made a lower low and it seems that there isn’t much good news in favor of a stronger USD to come. I position myself still neutral.

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Open Positions:     
- Long Gold @ 1785 USD  
- Short Cotton @ 92.72 USX
- Long Crude @ 69.71 USD

Closed Positions  

As always, here are my current top setups, selected from all major commodities and other important markets:

Elsewhere In The Macro World

The top for consumer prices is in but the median CPI will be higher over the coming year 2022.

This relates also to the job market report we saw this week. The big headline was that the US missed the expectations by far, but I immediately looked at the Average Hourly Earnings growth, a number which was again, higher than expected. This trend usually suggests that we will see tighter financial conditions in the future.

This week look out for:

  • JOLTS Job Openings on Wednesday (are there still more job openings than unemployed people?)

  • ECB decision on Thursday (will they give us more hints about a tapering scenario?)

  • US Producer Price Index on Friday (news from the inflation front)

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Till next Monday, Lukas

If you have any questions in the meantime, please feel free to contact me via Twitter or Mail.

(The Commodity Report is not investment advice)