With the momentum of the crowd and people feeling good again about the dollar (with no fundamental justification I say – we’re not paying down debt, not raising rates, and competing currencies are not offering lower yields, inflation is still rampant), that 15% oil spike that I felt might happen might not (THIS is an interesting site with decent oil chart analysis).
(Editor’s note – seems I was originally right when I wrote this article HERE)
(Another note – analyst comments on 6.6.08 that oil will spike to $150 over the summer HERE)
Some commodities are starting to correct but oil is still going up (it touched $127/barrel – see THIS ARTICLE in Yahoo Finance). Let’s use the ETF “USO” as the barometer for this article. If it were still to break 15% up from its last base, it would need to hit roughly $108 from its recent mini base of 95.69. Looking at the more substantial base it hit, the breakout point was just under $86 per share, putting a 15% upside move at $99 roughly and a 20% move at $103. Either way, we are in range to slow down and correct.
Other commodities are starting to take a rest also (food and silver for example). However, other commodities that had been downare starting to percolate. For example, sugar is still very un appreciated but with Brazil using all theirs as ethanol and worlwide sweet tooth demand rising, I wouldn’t count sugar out.
This may be the time to ease up on some commodities until the markets do something foolish and may give you a great entry point to buy back in for the long term trend.
Good luck out there.
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