Over the past 5 months the markets that crashed have staged a significant comeback. While the stock market usually grabs the headlines, there have been some great commodity runs as well. As the season’s change, the demands for commodities vary according to each respective market. For instance, let’s take a look at copper. Below is the 15 (Red) and 40 (blue) year averages of the Copper seasonal price chart. One of the more prolonged downtrends on the chart shows that from September to the middle of October, copper is usually weak. We can see the demand PHASE of this commodity is the December to April time frame.
Crude Oil
How about Crude oil? Things have been very choppy lately. Are we peaking? Interestingly, if we look at the seasonal chart, we can see that crude oil usually has a very choppy August, with up and down and sideways action. The good news for the bulls is that the Crude oil market still has about another 6-8 weeks left of its seasonal action. (NOTE – Do not follow the yellow months. Those are Futures Contracts. Follow the blue months at bottom of chart.
How to trade crude oil
In the crude oil chart below, we see the same meltdown of 2008 as we did in Copper. But other than that, the chart is following seasonality “this year”. But let’s look at what happens when “seasonality” inverts. You can see we bottomed in February of 2008 in February and we rallied to April. So far so good. But instead of pulling back into July and making a low, look how we exploded up and made a high in July. In fact, crude oil was the “MEDIA BOY” at the very peak. That its final ascent was a seasonal inversion will be something to keep an eye out for when we watch other inversions in the future. But that was it. When everyone got back home from July 4th vacation it was the end for crude as it virtually collapsed.
Gold
Finally tonight we want to take a look at gold. Here’s the seasonal chart below.
Gold spot Trading
We can see that we are at a key time for the gold seasonal. Lows are usually made right at the end of August. Interestingly, we are only about 30 dollars above the July lows, and the choppiness we’ve seen in gold is actually what the seasonal suggests this time of year. What’s important for gold is what lies in front of us. September. You can see that a nice rally usually develops from somewhere in this time frame. The “optimum” time is about to arrive. Like the other commodities gold also went to the barber shop last fall. But unlike all other commodities, gold has returned to its highs……….a real sign of strength so far. I say so far because we must also conclude that gold has not made a new high for 18 plus months. Many are anticipating a tremendous rally should the highs succumb to price.
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