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Trading Commodities – 09052023

This video has been translated into Arabic, Chinese, French, German, Hindi, Japanese, Korean, and Spanish.

Hello, everyone, and welcome to Tuesday morning. It’s Stephen Whiteside here from In the premarket this morning, things are fairly quiet, stock index futures and commodities are slightly below fair value. The only standout, I think, at the moment is the price of gold, which is down about $11 in the premarket. In this morning’s presentation, I thought we’d focus on the major commodities that we track, starting with crude oil, which made a higher high on Friday. It’s been on a buy signal for the last four trading days. We are punching through to higher highs with the pros taking control. You can see the Fly Paper Channel is acting as support. The traders have been buying the dip. We’re trying to punch through 84.38. It doesn’t look like we’re going to do that at the open on Monday morning. If we can do that, then 87.50 comes into play. Now looking at natural gas, not really participating right now, still on a sell signal. Things would change on Tuesday if natural were to close above $3.21. Unfortunately, the pros are not looking to take control on Tuesday morning. Back in August, we did trade up to the 100-day moving average.

If we can take that out in September, then the 200-day moving average would certainly come into focus and that would be an enormous move for natural gas. Looking at energy stocks, starting in the Canadian market, looking at the XEG, we made a new high on Friday, trading up to 17.19. Congratulations. Hopefully, you took some money off the table at 171.9. If we can keep going from here, then 1797 comes into play. Suncor made a new high on Friday. We’re trading up to the 46.88 level on the weekly chart that has held us in check in late 2022 and in 2023. If we can take that out this week, then $50 does come into play, and that would take us back up to the highs from 2022. To looking at the US market, looking at the XLE, we made a new high on Friday, trying to head towards 92.19. That is our next target to the upside. Devon Energy has been on a buy signal for a week now. It filled an open gap on Friday, so that gap has been filled. Now we’re looking to see if we can take out the recent high. We are stuck here at 53.13. If we can take out that recent high, then 56.25 comes into play.

To get to 56.25, unfortunately, we’d have to take out the 200-day moving average, and that might may be difficult at the moment. Again, if we can do that, then on the weekly chart, you can see 56.25 is our next target, and above that is 62.50 if we can keep going from there. Let’s move from energy to the mining sector, and we’ll take a look at gold miners and the price of gold this morning. Both are not looking very healthy at the moment. We have made a major lower high in July, and we made a lower low in August, so that pattern is not very helpful. Across the bottom of the screen, you can see an elongated Pressure Zone here, and that’s telling us that this particular symbol is off its game. We were looking for the market to bounce around here and try to run up and to see if we could retest the recent highs, but that didn’t happen. That opportunity passed. Then we looked at another opportunity, which gave us a lower high and a nice early warning signal up there. I’m not too excited about the precious metals at the moment with the price of gold really dragging its heels.

If we look at the right side chart here, we are on a buy signal right now. That would change on Tuesday with a close below $1941.70. We are trading above the 1937.50 level, trying to get to $2,000. We need to take out Friday’s high to do that. Unfortunately, we’re stuck at the convergence of the major moving averages. That’s holding us in check. When we look at the GDX, again, the pattern is very similar: the elongated Pressure Zone, the lower high, the lower low. This is all very bearish. Yes, we’re projecting higher prices here, but we’re projecting higher prices on a very weak symbol at the moment. We’ve run up to 29.69 and stop. If we can take out last week’s high than 31.25 would come into play for the GDX. We’re currently stuck at the 50-day moving average, and that is holding us in check at the moment. Now, the US’s biggest gold mining stock, of course, is a two-month, the only one in the S&P 500. This pattern doesn’t look too different. We had a major low back here in May. We made a lower high in July. We made a lower low in August.

And so, again, very bearish chart pattern. Yes, we had a nice Pressure Zone. We’re at the bottom of the Panic Zones. We are projecting higher prices for a very weak symbol. You can see we’re on a buy signal right now, but it’s not looking very healthy at the moment, and certainly the pros have not taken control. So when you get a buy signal after a couple of days, if the pros don’t come in to take control, that’s not a good sign. You can see we had a bearish reversal day on Friday. The Fly Paper Channel is still pointing down. If we were able to take out last week’s high and move up, then you can see we have a range, say from 4,175 to 43.75. I think that would hold us in check if we were able to continue to move higher from here. With gold down $11 in the premarket this morning, we’re not expecting that to happen. Now, Canadian gold stocks look very similar, nothing different here. The elongated Pressure Zone, the lower high, the lower low, all of that is bearish. We are on a buy signal. Things would change on Tuesday.

If we were to close below $16.82 for the XGD, and you can see we had a bearish reversal signal last week. The pros did take control for a few days and then gave up on Friday. We traded up to the 1719 level last week, tried to break out above it. If we can take out last week’s high, then 1797 would be our next target to the upside. Then looking at Barrick, the most actively traded Canadian gold stock, the pattern is pretty similar, but we actually put in a higher low in August, so a little bit different here. Not sure it’s going to help much with what’s going on with the price of gold itself. We are on a buy signal right now. Things would change on Tuesday with a closed blow, 21.54. We’ve traded up to the 50-day moving average. That’s holding us in check so far and the bottom of the Fly Paper Channel. I think this is probably as high as we can go at the moment. Let’s finish off just looking at the VIX and the S&P 500. The VIX is still falling. That is supportive for higher stock prices. You can see in August, we ran up to the 200-day moving average and stopped.

For a major decline in the stock market to happen in the month of September or October, we need to break out above that 200 day moving average. Now, the S&P 500, Spider ETF traded up to the 453.13 level on Friday and stopped. That was our next price target. We got as high as 453.67. So if you had orders in to get filled, congratulations, they got filled on Friday. For us to continue to move higher from here, the July high was up there at 459.44. If we were able to take that out, then that brings 4.68.75 into play. Not expecting to head in those directions on Tuesday morning, but it’s certainly doable in the month of September, which we expect a lot of volatility. On the downside on Monday, to generate a sell signal for the S&P 500 ETF, we need a close below 442.10. Of course, the first thing I look for is a close below the previous days low, and we’ll be watching for that on Wednesday. Okay, folks, that is all for this morning’s presentation. We’re looking for a little bit of selling at the open on Tuesday morning. Have a great day.

Next time you’ll hear my voice is on Wednesday morning.

Stephen Whiteside
Tuesday, September 5, 2023

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