REPORT Commodities: "Firm Then Fall Crash" from July 12th Pivotal Events - Bob Hoye

Commodities REPORT from July 12th Pivotal Events - Bob Hoye

For base metals, there are times when supply/demand research works. Particularly when the
numbers are so obvious. As in early 2011, when the real price (deflated by PPI) for most
base metals had made the biggest percentage gains in a hundred years. It was double the
previous best, which we often reviewed. Furthermore, real prices stayed high for an
unusually long time, suggesting an exceptional build of capacity.

Then our proprietary “Momentum Peak Forecaster” gave a rare signal. That was that base
and precious metals could reach a speculative peak by around that April 2011 and fail. Base
metals and miners were expected to suffer a long bear market. We compared the mining
stocks to their counterparts following the 1873 Bubble.

We see nothing in the fundamentals or technicals that would suggest that the lengthy bear
market is over.

In the meantime, we have been calling the intermediate moves from oversold to overbought.
On the near-term, base metals (GYX) were likely to be firm into August.

A double bottom was completed at 309 in May and early June. We thought the high could
be around 323. Two weeks ago, it was at 324 and we noted that the rally was not
overbought. It reached 329 at the first of the month. With the Daily RSI up to 70, it is
somewhat overbought.

Metals and miners could continue firm into August, but we are concerned about seasonal
weakness possible after August.

Crude oil prices were also expected to trade in a positive range into August. The pop into
early July reached 47 and the next low was the 43 level. This provides a range likely to run
into early September.

Oil stocks (XLE) would also trade in a range through August. The high at the first of the
month was 66 and the correction low was 63 last Friday. This range could prevail into early
September.

This sector can suffer seasonal weakness into December-January.

Lumber became very overbought on the rally to 415 in early April. The initial decline was
to 340 early in the month. The next correction held at 344 last Thursday. A narrow trading
range is possible into August.

The April high at 415 compares to the 412 reached at the cyclical peak in March 2013. A
cyclical bear is possible.

The broad commodity index (CRB) crashed down to 155 in January 2016. The rally made it
to 196 in January and the decline has been to 166 in June, which is not so far away from the
panic low. This index could trade in a narrow range into August. New lows are possible
later in the year.

Ask for the whole Pivotal Events Report here.