GSCI Commodity Index - Will the Bull Shakeout End the CorrectionThe commodity bull market that began in 2020 might not be over yet. The last three years, 2022, 2023, and 2024, could merely represent a healthy retracement within a larger bull market. A few months ago, there was a minor panic just below a clear support level, after which the market rebounded, suggesting that such low prices were not sustainable in this market. Currently, on a 10 day timeframe, the MACD has issued a buy signal. I have no idea if this buy signal will ultimately propel prices much higher, but considering the recent shakeout of the bulls, I remain bullish.
GD1! trade ideas
The Fed Signals Commodity TrendThe Fed signals that the commodity trend may be moving higher. In the latest FOMC meeting, the Fed lowered rates by a quarter point.
Contrary to the expectations of many analysts who anticipated more cuts in 2025, they signaled only two rate cuts next year, reflecting greater caution about the pace of further reductions in borrowing costs.
So, how is this being interpreted as an indication that the commodity trend may be moving higher?
Corn Futures & Options
Ticker: ZC
Minimum fluctuation:
1/4 of one cent (0.0025) per bushel = $12.50
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The forecast. Commodities1. DXY is in downward correction, and should make another 6%-8% down to the levels 90 by June 2020 (or 92 by September 2020, the faster the decline, the deeper the correction). The decline should form 5-waves. This is a technical requirement for 4th wave correction of the previous USD rise taken place between 2014-2017. The price is in divergence with RSI for a long time already, so the correction if overdue. Rising to 99.66 before correcting to 92 – invalidates the idea.
2. The correction not expected to penetrate the upward trend line, i.e. 90-92 is the target. Then the final 5th wave of USD up-trend will start, to last through 2022-23 and eventual increase USD value on 20-25%. US if the only developed country with positive real interest rate what cause the rise of USD. But by 2023 problems in US (falling stock market, falling GDP, rising internal and external obligations) will result in reverse and following USD collapse. Invalidation level - 84.50
3. Stock market will complete 3rd wave of the very last 5th by summer 2020, possibly at $3,400-$3,500 level. Then correction will ignite on US election uncertainty. After election a final 5th of 5th will start, to make a double-top, false breakout in 2021 (double-top was in 2000 and 2007)
4. Commodities are in uptrend already. GSCI will rise ~50%, while oil will make ~80% up. Most likely pure speculation will cause the trend in commodities as no much investment alternatives exist – stocks and bonds are too expensive. The uptrend in commodities will outlive stock market trend what is typical at the end of economic cycle. Invalidation levels: GSCI – 392, Brent Oil – $57
5. Rise in commodities will cause inflation, what eventually will force FED to raise the rates. Rising rates will kill the stock market in 2021, which only supported by buybacks and free money. Apparently does not make sense to print money and raise rates the same time, so free money supply should not be expected to last indefinitely.
6. Gold is rising (even after wild Friday drop I do not expect it to go significantly lower) with target ~$1,580 to complete 5th wave. This upward move is in harmony with USD correction. Should complete by April 2020. Invalidation level $1,360
7. Then a 5-wave correction down to ~$1,050 level will start to complete large-scale correction started in 2011. This one will be in sync with USD rise.
DXY USD OIL BRENTCRUDEOIL GOLD SPY SPX500 COMMODITIES GSCI
S&P GSCI (formerly the Goldman Sachs Commodity Index)Watch that trend-line. Possible breakout to the upside in the Commodity Index.