COMMODITIES IN CONTEXT- NOVEMBER NOTES © Leo Haviland Four notes written during November 2012

Regarding the S+P Goldman Sachs Agriculture Index (11/12/12):

Thus in recent years, some major trends in the Goldman Sachs Agriculture Index have paralleled those in the broad GSCI and US stocks (S+P 500). There of course have been leads (lags) in the timing of major price turns between the GS Ag Index and the broad GSCI and the S+P 500.

Despite a rally to the 7/20/12 plateau at 534, the recent failure of the Ag Index to sustain a move over the 2/27/08 summit around 513 and the 496 peak of almost 40 years ago (11/20/74; also see the price gap in summer 2012 around that 496 level) is a bearish sign. So is the Ag Index’s erosion since- and despite- the Federal Reserve’s announcement of QE3 money printing on 9/13/12. Since 9/14/12, note the similar slumps in the S+P 500 and the broad GSCI.

Chart Analysis- Goldman Sachs Agriculture Index (11-12-12)

Regarding metals marketplaces (“Metals, Marketplaces, and Meltdowns”, 11/8/12):

In 2011, key base and precious metals began bear trends. Take a look at the attached charts. Though different metals commenced their descents at various times, they all have fallen. Even gold has not surpassed its 9/6/11 top at 1921.

The Federal Reserve unveiled a third round of money printing 9/13/12. However, unlike what occurred after QE1 and QE2, US stocks (S+P 500 and Dow Jones Industrial Average) have not sustained an advance. Stock and commodity bulls might argue that only a few weeks have passed since mid-September. Nevertheless, the S+P 500 (9/14/12 at 1475) and Dow Jones Industrial Average (10/5/12 at 13662) made highs and then slumped. Declines in gold, silver, and the London Metal Exchange’s LMEX Index (and Brent/NSea and NYMEX crude oil) coincide with the 9/14/12 to 10/5/12 top in stocks.

In recent years, price and time trends of commodities “in general” and stocks have roughly mirrored (“confirmed”) each other. Thus the weakness in the overall metals complex is a noteworthy bearish warning sign for US (and “related”) equity marketplaces.

Metals Marketplaces and Meltdowns (11-8-12 charts)

Regarding crude oil (11/2/12):

Despite the Federal Reserve Board’s QE3 money printing adventure announced 9/13/12, the major bear trend in NYMEX crude oil (it started in May 2011; see also the March and May 2012 tops) has continued. That bear move in crude oil probably is not over.

Note the rough trend and timing relationship between NYMEX crude oil and the S+P 500 (and the broad GSCI, Brent/NSea crude oil, and the London Metal Exchange/base metal index).


NYMEX Crude Oil Chart (11-2-12)

For NYMEX natural gas (11/1/12):

Natural gas longs should reduce positions and/or get out now.

Natural Gas Chart (NYMEX nearest futures) (11-1-12)

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Commodities in Context- November Notes (11-2012)