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'Tis the season to be checking gold, copper, oil, and the US dollar.

By: John Winston

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As we move into another quarter it is always good to review the seasonal aspects of the market so as to have an idea what (on average) what happens usually? hard assets (and the paper ones too) have amassed quite a rally over the year.

seasonal average for Crude Oil. It is followed by the Light Crude Continous Contract. Crude usually bottoms in the middle to end of February.
When we look at the chart, we can see that while crude made its low at the beginning of the year, it remained in a consolidation until the end of February and then Bottomed. we can see that the % R oscillator finally came out of oversold area, and the MACD histogram began to register bars above the zero line.
By the beginning of March, oil had turned up, the 50 day moving average was overcome, and the seasonal low was in place.

that price moves only sideways to a bit lower until May, where a correction begins and last into July.

we can see that the rally did in fact PEAK in APRIL and it moved sideways into May.
But instead of continuing lower into June and July, a COUNTER SEASONAL rally developed and when MARKETS don't do what they are supposed to, a strong rally catches the crowd on the wrong side of the market stocks this year.

we see that a selloff into the JULY period did indeed happen.......
.albeit from a higher level. seasonal pull still produced a July low and that selloff was a decent one.


Now if we go back to the seasonal, we see that a PEAK IN PRICE IS DUE HERE. the top yellow months are CONTRACT months most likely time for Crude to develop a correction is this time of the year.
seasonal as crude has been going sideways most of the month and seasonally is ready for a good pullback.


A normal pullback would see Crude at the 47 to 54 area sometime this winter. AS LONG AS MACD histogram keeps rising and %R is above 80, and RSI moves above the 50 area, the rally can continue. MACD is barely above the zero area.
Combine that with RSI right at 50 and the odds suggest this market is about to make its move in the next two weeks one way or another.

This is what you should expect to see. remains strong
(weak US DOLLAR) instead of turning down here, Crude would break the old highs and start another leg, probably into November. there are so many other wild cards
(Iran) It is not easy to calculate projections. And I think the sideways action speaks to that.

odds will favor a seasonal delay.
On the other hand, if crude were to break below the 50 day average, then the lows of September, then the odds would favor the seasonal being underway.

copper market as it is so important to the global growth of the world although not a precious metal, it is good to keep an eye on it.

The seasonal chart reveals that copper is another September candidate for a pullback into October, with an end-of-the-month blip in November, and finally a December low.

During a pullback to the July period the seasonal chart shows that like Crude, copper has a high point in April. Copper is much more PRONOUNCED but the timeframes are similar.

Copper behaved similar to crude by scaling new heights in April and having remained unchanged through May, rose in June to fall again in July And just like crude, copper ran up into September, and has gone sideways. And just like crude was stronger than expected, so was copper. And every stock has seen lows and highs all these years and have stabilized in a sort of an average figure Coppers technical picture also shows a %R reading that has just dropped out of the 80 range, and MACD histogram is right at the zero line. For the first time in quite a while, RSI has dropped below 50 and has recently made its way back to 50.

copper is at a turning point too and the direction should be established within the next few weeks.
Above 310 and copper too could be heading higher one more time before the fall correction begins. Below the 260 area and the correction should be in full bloom. We suspect that both commodities will follow each other.

look at the gold seasonal.

Gold has followed the seasonal pattern very close this year. We can see that a major price peak occurred in mid February right on time, and that a late March bounce to April and a correction to May took place. LIKE crude and copper, the May to JUNE period was a much stronger seasonal upward bias as is the average. September and then has a peak in early October and a sizeable correction into the November or December time frame.
Until December the price is usually choppy.

Unlike the other commodities, gold's technical condition is still in BULLISH mode........although one can make a case that RSI is flashing OVERBOUGHT. We think that %R must drop below 80 and the MACD histogram bars need to stop RISING first, this is what we agree.

These commodities have pretty much followed themselves from an ebb and flow standpoint. Copper has been registering a steady increase

These markets have pretty much followed each other this year and the time has come when all of the seasonal trends seem to favor the downside. As per the trend obtained now, there is a likelihood of corrections happening any time from now onwards till November. The stronger the commodities are, the longer before the correction starts. Oil and Copper have already turned over and seem to be waiting for gold to complete its up move.

Without question, the year opened with success. The dollar made a strong seasonal high in March right on its seasonal schedule. And that is when things turned. The stock market bottomed, and so did crude oil a few weeks before that.

Upon examination, an observer can clearly see April's mid-month contra seasonal. Instead of moving higher to June the US Dollar collapsed. As stated earlier, this is usually what happens when a contra seasonal appears. The trend becomes strong as market participants are not positioned as they usually are.

It's been pretty much down since then for the US Dollar.

Conclusions:
If you've been having difficulty understanding market behavior lately, these charts suggest to me that the analysis is already what we all know. Funny money is running counter to all markets. The US Dollar is funny money can you imagine? That is what it has become. The reality is it has turned HARD money in the grim scenario

OVERSOLD as % R just can't come out of bearish mode.
this looks like an EKG of someone who has died your close.

There will be at the very least a dead cat bounce, while the dollar trend is clearly down. we should expect a 4-6 week reprise in the dollar as the seasonal chart suggests.
odds favor that the commodities correction in gold and even in crude or copper might not arrive until the mid November time frame.

Whenever the time frame arrives we should see the US dollars technical condition show %R come out of oversold, RSI begin to rise again (NOTICE THE HUGE DIVERGENCE THERE as RSI has not made a new low with price) MACD histogram to hold the zero level and put in a higher bar.
When that time arrives, expect to see a brief correction, around the start of autumn, of the gold, crude, and copper markets prior to the dollar beginning its next leg down. you see them it will give you a clue that a short term bounce of 4-6 weeks and a subsequent commodities pullback is probably near.


If the market trends continue, commodities will become stagnant and not rise again at the end of next year.

Article Source: http://depositarticles.com/

Get my Commodity Trading Reports each week: www.TechnicalCommodityTrader.By: John Winston

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