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April 10, 2024: Commodity performance is building

The recent surge in prices for raw materials that power transportation and manufacturing shows investors are betting on a prolonged expansion and a potential rebound in inflationary pressures (Chart 1).

The indexes of the Commodity Research Bureau Index (CRB) and the index of global commodity prices, the S&P GSCI (GTX) have advanced 12.25% and 11.95% respectively since the start of the year.  Both have outperformed the 8.9% rise of the S&P 500.  

Two of the most economically-sensitive commodities, oil and copper, have advanced 17% and 10% respectively.  Even gold has rallied 14% to a new high.

The rally is based in expectations that economic growth in the U.S. and China will increase demand. 

The rally in commodities reverses a 24-month slide from the highs reached in mid-2022 after a host of bad news. The Russia invasion, the sour U.S. economic outlook including an expected recession, Higher interest rates, and China's struggling recover from the Covid lockdown.

Instead, the recession never came.  The U.S. economy has remained robust even as inflation has cooled.

Chart 2 is from Martin Pring's research.  It highlight's the the turning points for bonds, stocks and commodities in an idealized business cycle.

His analysis suggests that commodities should be starting to strengthen in performance and continue progressing until the end of the bull market.

Our targets for the CRB is 320, the GTX at 4,200, WTI at $96.20, copper at $4.46 and gold is expected to pull back to $2,225 before advancing to $2,485.

On Wednesday April 17th at 3:20 EST, 12:20 PST, I will be offering a FREE presentation titled: The Simplest Methods to Outperform the TSX.  The same methods will also be applied to the S&P 500.

The registration link is below.  Copy and paste on your browser.