Commodities on the Verge of a Major Breakout $DBC $RJI $DJP $GSG $GCC $UCI

Rarely have we witnessed a time like now when it seems that all the stars are aligned to support a significant move to the upside in commodities. We have approached the “thesis” of a breakout in commodities from a number of perspectives both intra-market and inter-market and we can find no evidence that supports an argument that the next big move for commodities is down rather than up. We present our evidence as follows:

Intra-market:

1. The old CRB (the CCI) has already made a new high,
2. The new CRB is a only a few percent away from a multi-week high and has been making a series of higher lows since early June,
3. Crude Oil, perhaps the most important commodity, etches closer to the $75 level and on Friday closed higher even in light of a stronger USD,
4. Precious metals are at multi-week highs already and now gold is threatening to take over the lead form the Aussie dollar as the world’s strongest currency (over the last four months at least).

Inter-market:

1. Shipping stocks against all odds and the worst outlook in living memory are a mere 1% away from multi-week highs,
2. Baltic Freight rates have turned higher breaking out of their downtrend that began in early June,
3. TIPs vs. the USD 10yr are on the verge of registering a multi-week high,
4. Crude Oil is pushing ever so close to its multi-week high of $75 a breach of which is likely to be met with buy orders from momentum traders,
5. World Steel stocks look set to register a multi-week high against the Dow World index,
6. The Aussie Dollar Yen has broken above the key 80 level and now looks set to register a multi-week high reinforcing the positive momentum for the “carry” trade. The “carry trade” ETF DBV closed at a multi-week high on Friday as well.

We would not take any individual chart’s bullish appearance seriously. However, when all the charts confirm each other we take the signal generated very seriously. We welcome arguments that challenge what we are seeing or at least how we are interpreting them. One of the hardest things in investing is critiquing your own arguments.