Tuesday, January 10, 2017

Commodities: prospects for January

MACD bear divergence on SP500

The MACD indicator generally gives good results in indices such as the SPX. As you can see there is a clear bear divergence these days, similar to the one that occurred in mid-2016, which starts the usual technical corrections. Remember, it is fatal to do trading based on a single technical data. This technical detail, you have to read it in combination with the news, in this case the first press conference of Trump, tomorrow, and what his secretary Tillerson (former Exxon XOM CEO) announces, events that I presume will have a bearish corrector effect in some sectors of the market, more than others.

To my taste, the most interesting moves to trade this week will be in the commodities, which I detail below.

The /ES July-August bear divergence triggered the pullback of September. 
A similar figure has been repeating these days.

Health sector in strong recovery

The Health sector XLV has been recovering, with 6 sessions in a row, after being the least favored initially with Trump's triumph. His opposition to Obamacare, the universal health program promoted by Obama, hit this sector hard, as you can read here

This week the Annual Healthcare Conference is being held in San Francisco, the largest of the year, where the Biotech subsector (followed by the IBB index) will be the main protagonist. Finished it, we will see the conclusions and the main favored stocks.

Main economic events of the week in the US, basic for good trading on Wall Street.

Commodities Update: Gas, Gold, Crude Oil, Copper

- Speculative movements of natural gas /NG, make it rise today 6% after several days of falls (of the order of 20%) in the news of a winter not as cold as predicted in December, leading to lower gas consumption. However, nothing guarantees that this increase will continue, it is simply an obvious technical correction. Safer is to wait for the results of inventories, this Thursday, and see the weather as it responds in these weeks. If you want more risk, the very volatile triple-rate etf UGAZ and DGAZ, bullish and bearish, take advantage of the momentum of the commodity.

 - The gold /GC is recovering, reaching its highest point of the month, this before the certain weakness of the dollar after its meteoric boost post-Trump. At the moment it is an ideal commodity only to speculate in the short term, just with the first Trump actions and the evolution of the SPX will be confirmed if the gold will have a good 2017. The etf 3X NUGT and DUST for the more seasoned.

- Crude oil /CL returns to its usual uncertainty, with doubts about breach of the stipulated cuts, both by OPEC and non-OPEC countries, added to the proven increase in reserves in the US and its fracking, outside these treaties, trying to take advantage of the situation, as I mentioned earlier. Today falls again 2% after the rise of last week. I'm waiting tomorrow the inventory data to decide to trade here.

Crude, gas and gold: in daily charts of the last 5 months to notice their different tendencies.

- Copper /HG, the main material for construction, had a breakout, breaking resistances, after the election of Trump and his offer to 'rebuild America', to then enter in December in technical correction. Today he seems to find a solid support in 38.2% of his Fibonacci, already for several days, and with his MACD changing to positive. In addition, today was the news of increased inflation in China, its main market, signal of secure demand.  The JJC etf follows it quite well, and is a good trading alternative for this month.

The 38.2% of its Fibonacci seems good technical support. 
Copper today up 3.4%, its highest monthly rise.