2014 - The Year of Commodities

By: Trader MC | Thu, Mar 6, 2014
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Charts are telling me that 2014 should be a great year for Commodities and Miners and I expect a period of financial market turmoil for the US Market. I believe that we are very close to an important corrective move as the Market is due to top in March 2014. The Rhythm of the Dow Jones Index is telling me that a major top could already have been printed:

Rhythm of the Bull market, Dow Jones
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The current Cyclical Bull Market has reached the same period duration as the previous one (2003-2009). The second leg up of this Bull Market has also been reached 2 months ago. Therefore the time window for a top has been completed and I think we should not be surprised if a strong down move begins in the coming days.

SPX Major Top
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The following chart puts in perspective the major tops and lows in the US Market. If the market keeps pace with the previous rhythm, I expect a major top in 2014 and a major low in 2016.

SPX Big Picture Tops and Bottoms Chart
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Here are the Gold and Silver big picture charts. The current Gold Double Bottom Pattern occurs right on the symmetry guideline. Silver is also in a process of a Double Bottom Pattern and back tested twice the Base Pattern neckline.

Big Picture Gold Patterns Chart
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Silver Big Picture Pattern Chart
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Since the beginning of the year we can notice that some money flow was coming into Commodities, Metal and Miners. The market gave us some important clues already at the beginning of 2014 - some ratio charts were clearly telling us that early January was a buy signal for all the Mining stocks. They also put in perspective that money flow was going to come into the Metal and the Miners sectors. Here you can see the Dow Jones/Gold and the Miners/Bonds ratio charts showing that investors are leaving the US Market and the Bonds to come into the Metal and Miners Sectors:

Dow/Gold Ratio Chart
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Miners/Bonds Ratio Chart
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On the following chart we can notice that Miners should outperform the Gold Metal:

Gold/Miners Ratio Chart
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Below is the ratio chart of SPX/CRB that also shows that money is leaving the US market and is coming into Commodities. There is still a lot of downside potential move.

US Market and CRB Index Ratio Chart
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I believe that most institutional investors have already anticipated a turn in the US Market and started to invest in the Commodities sectors. Metal, Miners and Agriculture should be the best sectors that will outperform in 2014. Large profits will be made by those who keep in mind the big picture.

 


 

Trader MC

Author: Trader MC

Trader MC
http://tradermc.com

Trader MC is the author of Tradermc.com and the founder of Cycle Trader MC OÜ. He is a Market Timer and a Technical Analyst. His financial market analysis covers different assets - Market Indexes (US, Europe, Emerging Markets, China, Russia etc.), Commodities, Currencies, Bonds and Rates. Using mainly Price Action and the Technique of Cycles completed sometimes with Elliott Wave Principle and Sentiment Indicators, his work is to keep all the MC Community on the right side of the market.

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"A constant study of the market is hard work but it is a source of pleasure for me. Trading is my freedom but my real happiness comes from the process of the work itself, not from the money that may come with it. The essence of success requires a constant process of learning and growing. I devote myself entirely to trading and therefore there is no forum on this website. I believe the easiest way to make big money is to jump on board the Cyclical Bull Market and those few who control their emotions, staying focused on the big picture, will make very large profits."

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Source: The Contrarian Take http://blogs.forbes.com/michaelpollaro/
austrian-money-supply/