BHP has dominated the news for the past few days. So, this week I want to look at the overall picture.
Starting with the daily chart of BHP. We all know that BHP has been basically going sideways now for some time and gapped lower at the end of last week. Is it going to break down?
Further down the page I have included the chart of XMM. We can see here that the patterns are very similar so I cannot help thinking that if people see BHP breaking down, then it may well lead the rest of the sector lower.
So, the latest news has ramifications not just for BHP.
View attachment 6134901But when we look at the longer-term picture, and here I am including them both again but on a weekly basis on semi-log scale, we can see just how beautiful both charts are. I have been watching the flat tops in each, thinking it was almost an invitation for the market to go up and break topside but so far this hasn’t happened. Will the moves by BHP slow the process down even further.
View attachment 6134904The next chart is the monthly chart of copper (semi log scale) which is at the highest level for some time. This appears to be the main reason for the latest moves by BHP.
View attachment 6134907Moving on but still connected, is the chart of MVW the VanEck Equal weighting of our market. It is a good chart to watch as it clearly highlights the battle going on with the weakness of the major miners and the strength of the banks. We need to see it break that initial downtrend I have drawn, then we should be able to move higher, but it needs to do it with some confidence, or this could still end up being part of a major top pattern across indices.
View attachment 6134910And back to the US, this week I have the NASDAQ Comp. Had a really nice correction bringing it back to support. It has now bounced. On the same chart I have included the running total of the net new highs and the new lows. (I do have to re-draw this section as the scale is too broad) But just look at that uptrend and when it was broken, down the market went. The NASDAQ looks as though it wants to continue higher but ultimately, we must see more of the stocks in this sector taking part or the rise will run out of steam fairly quickly.
View attachment 6134913Another favourite chart of mine – Australian ten-year bonds (black) and US ten-year bonds in red. Just look how they continue to move together.
View attachment 6134919And then looking again at the daily chart of the US ten-year bonds that I included last week. We can see now that it is still in that well defined uptrend. As mentioned before, it has met the target out of that lovely triangle pattern having pulled all the way back up under the previous highs. I think we should have a correction here – but I said that last week!
View attachment 6134922Can’t go a week without including my fabulous daily close chart of the gold price. And look at that uptrend line. Has to be one of the best trendlines ever. And it still hasn’t been broken. I have been looking for a correction for three weeks and it hasn’t done it but as I have said before – don’t stand in front of moving trains. It still might decide to do another leap forward. Needs close attention this week.
View attachment 6134925And now something interesting – Shanghai and on the lower level the daily close of the HangSeng. It is looking like “they” would like to see the Shanghai index higher. If it does continue, it would definitely be a plus for other world markets. On the lower level of the chart, look what the HangSeng has done - broken a rather lovely downtrend channel. Just a bit brighter picture coming from this area.
View attachment 6134928And then – what I think is the actual star of the week – the chart of WEAT the ETF of the wheat market. I highlighted this chart a couple of weeks ago when it looked like it was going to have a go at the downtrend. It has certainly been successful. Remember – wheat is one of my indictors of INFLATION.
View attachment 6134931Thinking further, looking at long term market cycles, commodities are due to shine and there are lots of encouraging developments across many markets, but what we must always keep in mind, is that cycles are not set in stone.
(20min delay)