Commodities Breaking Out, Suggesting Bull Market Is Ahead

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Are Commodities ending a 5-year trading range, inside of a 50-year bull trend? Sure is looking like it!

This chart looks at the TR Equal Weight Commodity Index, based upon quarterly pricing, dating back to the 1950s.

Since the early 1970s, the index has created a series of higher lows and higher highs, forming a rising channel (1).

The index hit the 2008 lows in March of this, where it created back to back bullish reversal patterns at support. Commodities struggled with resistance numerous times at (2), forming a strong overhead price level.

The rally off the March lows has the index breaking above 5-year resistance at (3), which sends a positive message from a sector that has lagged stocks for years and years.

Commodities have been a place to avoid since the highs back in 2011. A successful breakout at (3), would suggest this weak sector is about to start an intermediate new bull trend.

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