Commodities Bull Market... Coming to an End?
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usctrojanman29_IHB
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[quote author="awgee" date=1217931930]If you research the typical length of time for commodity bull markets, I think you will see that they last approximately twenty years. We are about five or six years into a twenty year commodity bull market.</blockquote>
That may be true, but the parabolic moves in many of the commodities over the past 6 months were a little over done by the speculators. So like with housing, what goes up too much, too fast will eventually come down a good percentage.
That may be true, but the parabolic moves in many of the commodities over the past 6 months were a little over done by the speculators. So like with housing, what goes up too much, too fast will eventually come down a good percentage.
graphrix_IHB
New member
Check out the <a href="http://www.cftc.gov/marketreports/commitmentsoftraders/index.htm">commitment of traders site</a>. Go through the reports of the commodities you are invested in, and look at whether the commercials are net short or net long. Ignore the non-commercial traders. This will give you a decent idea of where the pros are thinking things will go. Currently they are slightly net short on NYMEX Lt. sweet crude, but net long on wheat and nat. gas.
tmare_IHB
New member
[quote author="graphrix" date=1217946261]Check out the <a href="http://www.cftc.gov/marketreports/commitmentsoftraders/index.htm">commitment of traders site</a>. Go through the reports of the commodities you are invested in, and look at whether the commercials are net short or net long. Ignore the non-commercial traders. This will give you a decent idea of where the pros are thinking things will go. Currently they are slightly net short on NYMEX Lt. sweet crude, but net long on wheat and nat. gas.</blockquote>
Thanks for the site, it is helpful. I trust my CTA but I am trying to stay informed about the current market conditions and I sometimes find that I get better info from the real people on this site.
Thanks for the site, it is helpful. I trust my CTA but I am trying to stay informed about the current market conditions and I sometimes find that I get better info from the real people on this site.
usctrojanman29_IHB
New member
From what I've heard on CNBC, Oil broke support at $120ish and could go down into the low $110ish range. May the party is over at the oil camp and the guests have started heading for the door. Looks like the metals are also fading really quickly.
awgee_IHB
New member
[quote author="usctrojanman29" date=1218007403]From what I've heard on CNBC, Oil broke support at $120ish and could go down into the low $110ish range. May the party is over at the oil camp and the guests have started heading for the door. Looks like the metals are also fading really quickly.</blockquote>
How sure are you that this is not a bear market trap?
How sure are you that this is not a bear market trap?
usctrojanman29_IHB
New member
[quote author="awgee" date=1218017907][quote author="usctrojanman29" date=1218007403]From what I've heard on CNBC, Oil broke support at $120ish and could go down into the low $110ish range. May the party is over at the oil camp and the guests have started heading for the door. Looks like the metals are also fading really quickly.</blockquote>
How sure are you that this is not a bear market trap?</blockquote>
If I was sure, I'd be rich. But one thing is for sure...the technical charts on oil, corn, copper, gold, natty gas, etc don't look very pretty. I'm sure you'll agree with me that a portion of the run up in a lot of these commodities was due to "hot money" spectulators/hedge funds and now that things are slipping they may be heading towards the door. I still think that the stock market is overvalued and is prone to taking another leg down because people think the recovery will come sooner than it really will.
How sure are you that this is not a bear market trap?</blockquote>
If I was sure, I'd be rich. But one thing is for sure...the technical charts on oil, corn, copper, gold, natty gas, etc don't look very pretty. I'm sure you'll agree with me that a portion of the run up in a lot of these commodities was due to "hot money" spectulators/hedge funds and now that things are slipping they may be heading towards the door. I still think that the stock market is overvalued and is prone to taking another leg down because people think the recovery will come sooner than it really will.
no_vaseline_IHB
New member
Pork bellies closed down limit today. Thier chart is ugly.
<a href="http://tfc-charts.w2d.com/chart/PB/88">http://tfc-charts.w2d.com/chart/PB/88</a>
Wheat appears to be trending down, but closed almost limit up. It's chart is also ugly.
<a href="http://tfc-charts.w2d.com/chart/CW/98">http://tfc-charts.w2d.com/chart/CW/98</a>
I never thought I'd ever see the day when wheat traded over four dollars a bushel again (1974). Now it trades over eight.
<a href="http://tfc-charts.w2d.com/chart/PB/88">http://tfc-charts.w2d.com/chart/PB/88</a>
Wheat appears to be trending down, but closed almost limit up. It's chart is also ugly.
<a href="http://tfc-charts.w2d.com/chart/CW/98">http://tfc-charts.w2d.com/chart/CW/98</a>
I never thought I'd ever see the day when wheat traded over four dollars a bushel again (1974). Now it trades over eight.
awgee_IHB
New member
[quote author="usctrojanman29" date=1218019657][quote author="awgee" date=1218017907][quote author="usctrojanman29" date=1218007403]From what I've heard on CNBC, Oil broke support at $120ish and could go down into the low $110ish range. May the party is over at the oil camp and the guests have started heading for the door. Looks like the metals are also fading really quickly.</blockquote>
How sure are you that this is not a bear market trap?</blockquote>
If I was sure, I'd be rich. But one thing is for sure...the technical charts on oil, corn, copper, gold, natty gas, etc don't look very pretty. I'm sure you'll agree with me that a portion of the run up in a lot of these commodities was due to "hot money" spectulators/hedge funds and now that things are slipping they may be heading towards the door. I still think that the stock market is overvalued and is prone to taking another leg down because people think the recovery will come sooner than it really will.</blockquote>
Exactly, the hot, or momo, or hedge fund money. But that is not what makes a bubble. A bubble is formed when Uncle Willy and Joe6pack get in. A bubble is formed when the dumb money is in, not the smart money. Until the dumb money is in, it is all just noise. I do not know how to attach charts, but the charts for oil and gold and silver are all showing that they are in the midst of a multi year uptrend and nothing that has happened in the last two weeks has changed that. I do not bet on short term movements. I bet on long term fundamentals.
I think the important question to ask are what are the fundamentals that drive commodities?
How sure are you that this is not a bear market trap?</blockquote>
If I was sure, I'd be rich. But one thing is for sure...the technical charts on oil, corn, copper, gold, natty gas, etc don't look very pretty. I'm sure you'll agree with me that a portion of the run up in a lot of these commodities was due to "hot money" spectulators/hedge funds and now that things are slipping they may be heading towards the door. I still think that the stock market is overvalued and is prone to taking another leg down because people think the recovery will come sooner than it really will.</blockquote>
Exactly, the hot, or momo, or hedge fund money. But that is not what makes a bubble. A bubble is formed when Uncle Willy and Joe6pack get in. A bubble is formed when the dumb money is in, not the smart money. Until the dumb money is in, it is all just noise. I do not know how to attach charts, but the charts for oil and gold and silver are all showing that they are in the midst of a multi year uptrend and nothing that has happened in the last two weeks has changed that. I do not bet on short term movements. I bet on long term fundamentals.
I think the important question to ask are what are the fundamentals that drive commodities?
no_vaseline_IHB
New member
You can get yourself in trouble with fundamentals and commodities.
In 1991 I read all the market data I could on cotton. The synapsis was that global demand was growing and that we had record tight carryovers and reduced plantings.
By 2001 they were saying the same thing. Even tigher carryovers.
Here's a chart:
http://www.tfc-charts.w2d.com/chart/CT/M
The same range as 15 years ago, 20 cents below the cost of production. Only possible under the worldwide blanket of subsidies. And as of next year, soon to be an obsolete crop in the state of California, with the exception of those growers who farm in the Tulare Lake basin.
In 1991 I read all the market data I could on cotton. The synapsis was that global demand was growing and that we had record tight carryovers and reduced plantings.
By 2001 they were saying the same thing. Even tigher carryovers.
Here's a chart:
http://www.tfc-charts.w2d.com/chart/CT/M
The same range as 15 years ago, 20 cents below the cost of production. Only possible under the worldwide blanket of subsidies. And as of next year, soon to be an obsolete crop in the state of California, with the exception of those growers who farm in the Tulare Lake basin.
tmare_IHB
New member
The fundamentals, I guess, are demand. I really don't see demand going down given the drive of China and other countries towards industrialization. However, in the short term I am concerned about the possibility of the current market being in a bubble that could burst on me.
usctrojanman29_IHB
New member
[quote author="awgee" date=1218022373][quote author="usctrojanman29" date=1218019657][quote author="awgee" date=1218017907][quote author="usctrojanman29" date=1218007403]From what I've heard on CNBC, Oil broke support at $120ish and could go down into the low $110ish range. May the party is over at the oil camp and the guests have started heading for the door. Looks like the metals are also fading really quickly.</blockquote>
How sure are you that this is not a bear market trap?</blockquote>
If I was sure, I'd be rich. But one thing is for sure...the technical charts on oil, corn, copper, gold, natty gas, etc don't look very pretty. I'm sure you'll agree with me that a portion of the run up in a lot of these commodities was due to "hot money" spectulators/hedge funds and now that things are slipping they may be heading towards the door. I still think that the stock market is overvalued and is prone to taking another leg down because people think the recovery will come sooner than it really will.</blockquote>
Exactly, the hot, or momo, or hedge fund money. But that is not what makes a bubble. A bubble is formed when Uncle Willy and Joe6pack get in. A bubble is formed when the dumb money is in, not the smart money. Until the dumb money is in, it is all just noise. I do not know how to attach charts, but the charts for oil and gold and silver are all showing that they are in the midst of a multi year uptrend and nothing that has happened in the last two weeks has changed that. I do not bet on short term movements. I bet on long term fundamentals.
I think the important question to ask are what are the fundamentals that drive commodities?</blockquote>
Well, in the short term the global economy is slowing so demand may be leveling off for now. I don't think oil is going back to $60/barrel but we may be going back down to $100 in the near term. Check out the chart on Copper (looks like it's falling off a cliff)...
http://www.kitcometals.com/charts/copper_historical_large.html#6months
How sure are you that this is not a bear market trap?</blockquote>
If I was sure, I'd be rich. But one thing is for sure...the technical charts on oil, corn, copper, gold, natty gas, etc don't look very pretty. I'm sure you'll agree with me that a portion of the run up in a lot of these commodities was due to "hot money" spectulators/hedge funds and now that things are slipping they may be heading towards the door. I still think that the stock market is overvalued and is prone to taking another leg down because people think the recovery will come sooner than it really will.</blockquote>
Exactly, the hot, or momo, or hedge fund money. But that is not what makes a bubble. A bubble is formed when Uncle Willy and Joe6pack get in. A bubble is formed when the dumb money is in, not the smart money. Until the dumb money is in, it is all just noise. I do not know how to attach charts, but the charts for oil and gold and silver are all showing that they are in the midst of a multi year uptrend and nothing that has happened in the last two weeks has changed that. I do not bet on short term movements. I bet on long term fundamentals.
I think the important question to ask are what are the fundamentals that drive commodities?</blockquote>
Well, in the short term the global economy is slowing so demand may be leveling off for now. I don't think oil is going back to $60/barrel but we may be going back down to $100 in the near term. Check out the chart on Copper (looks like it's falling off a cliff)...
http://www.kitcometals.com/charts/copper_historical_large.html#6months
Trooper_IHB
New member
Good. Maybe they'll stop stripping houses now.
no_vaseline_IHB
New member
<a href="http://www.bloomberg.com/apps/news?pid=20602013&sid=aaVt5vLmmqQE&refer=commodity_futures">http://www.bloomberg.com/apps/news?pid=20602013&sid=aaVt5vLmmqQE&refer=commodity_futures</a>
More evidence the market is overbought.
Again, I don't have an axe to grind. But I could potentially have a crop to sell, and not as a speculator.
More evidence the market is overbought.
Again, I don't have an axe to grind. But I could potentially have a crop to sell, and not as a speculator.
no_vaseline_IHB
New member
[quote author="awgee" date=1218073087]IMO, the first fundamental in the overall commodities market is the currency being used to purchase the commodity, and it seems that is very seldom considered by those expounding of commodities.</blockquote>
Considering that the currency has half the value it did 15 years ago (speaking only of cotton) that is quite frightening.
You may know this, but I for one am greatful for a weak dollar. A strong dollar is bad for my interests, although you could successfully argue it's good for my straight job.
Considering that the currency has half the value it did 15 years ago (speaking only of cotton) that is quite frightening.
You may know this, but I for one am greatful for a weak dollar. A strong dollar is bad for my interests, although you could successfully argue it's good for my straight job.
usctrojanman29_IHB
New member
Oil, gold, metals, and most other commodities are getting kicked in the teeth today. The way oil prices are going, we may be at $100 by Labor Day. Looks like inflation fears are decreasing.