Short-term CRB Rally Driven Mainly by Oil

By: Donald_W_Dony

The recent rebound strength in the Commodity Research Bureau Index (CRB) has been underpinned by only a select few natural resources.

The CRB having completed a basing pattern in Q2/Q3 has rallied largely on the back of a single commodity - Light crude oil.

Copper prices have also contributed to the rebound, but the heavy lifting has gone to WTIC.

As near-term futures contracts point to $61 for oil and $3.25 for copper, the rebound maybe short-lived.

Natural gas prices continue to slump as the outlook for winter demand conditions remains soft. With inventories remaining high and winter weather expected to be mild, NatGas prices are anticipated to remain around $2.60.

Gold prices largely move opposite to the US$. With the dollar currently having trouble finding support, in spite of a rising interest rate, gold is finding some short-term price support around $1,275.

Copper continues to be the other shining star among the commodity universe. The red metal is receiving some tailwind support from the expanding U.S. economy. The promise of infrastructure spending is keeping copper afloat.

Bottom line: The recent rebound in the CRB is narrow in its underlying support. Light crude oil and, to smaller degree, copper are the main drivers of the rally.

As Light crude oil prices near the upside target of $61 and copper is expected to top-out around $3.25, the upside rebound for the CRB is expected to be limited.

By Donald W. Dony, FCSI, MFTA
www.technicalspeculator.com

COPYRIGHT © 2017 Donald W. Dony
Donald W. Dony, FCSI, MFTA has been in the investment profession for over 20 years, first as a stock broker in the mid 1980's and then as the principal of D. W. Dony and Associates Inc., a financial consulting firm to present.  He is the editor and publisher of the Technical Speculator, a monthly international investment newsletter, which specializes in major world equity markets, currencies, bonds and interest rates as well as the precious metals markets.   

Donald is also an instructor for the Canadian Securities Institute (CSI). He is often called upon to design technical analysis training programs and to provide teaching to industry professionals on technical analysis at many of Canada's leading brokerage firms.  He is a respected specialist in the area of intermarket and cycle analysis and a frequent speaker at investment conferences.

Mr. Dony is a member of the Canadian Society of Technical Analysts (CSTA) and the International Federation of Technical Analysts (IFTA).

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