Commodity ETF technicals show room for growth

INTERMEDIATE TERM SIGNALS & MARKET ANALYSIS

iPath DJ-UBS Copper (JJC):
08/17/2012 Closing Price: 43.39
INTERMEDIATE TERM (I.T.) SIGNAL:

Intermediate Term Trend is bearish.
Current Position: FLAT.
Working Orders:
BUY @ 43.47; REVERSAL STOP @ 42.29
Upcoming Break-Even Price: 44.94; Cover 20%
Current Upside Target = 47.91
Projected Weekly Range: 1.49
Trading 128,000 Shares

I.T. ANALYSIS:

  • Upcoming initial trade risk is $188,160 or .38%.
  • JJC is an ETN that holds only a single commodity, the Copper High Grade futures contract.
  • JJC has formed a VRCB for the second week in row with nearly equal highs and lows. Price action was bearish divergent, exhibiting a lower high and lower low yet a very strong bullish close, indicating 43.47 should be traded Monday. 43.47 is our revised long entry price with 42.29 as the new reversal stop. A strong support area has formed around the 41.70 area. If this area fails to support our upcoming trade we believe the bottom will be retested and fail, entering a trend-supported short position.

United States Oil (USO):
08/17/2012 Closing Price: 35.95

INTERMEDIATE TERM (I.T.) SIGNAL
:
Intermediate Term Trend is bearish.
Current Position: FLAT
Current Upside Target = 35.85 – 37.87*Extended Upside Objective
Projected Weekly Range: 1.61
Trading 159,000 Shares

I.T. ANALYSIS:

  • USO seeks to replicate the spot price of WTI light, sweet crude oil and primarily holds futures contracts.
  • USO met 100% of our upside target last week and after further evaluation, we are issuing a higher extended price target of 37.87. The counter-trend rally continued last week as it closed at the weekly high, 35.95. Buying pressure rallied prices above 35.66, indicating 50% of the previous top to bottom correction had been regained. Relative strength, momentum and price action all display bullish characteristics that has led this market off of its yearly lows. We do believe, however, that this rally will fail before retesting the previous top, 42.30, where short entry positions will be taken.

United States Natural Gas (UNG):
08/17/2012 Closing Price: 18.71
INTERMEDIATE TERM (I.T.) SIGNAL
:
Intermediate Term Trend is bullish.
Current Position: SHORT @ 20.39 on 08/09/12. STOP @ 21.36
Break-Even Price: 18.35; Cover 20%
Current Downside Targets = 17.27 – 16.36
Projected Weekly Range: 2.12
Trading 100,000 Shares

I.T. ANALYSIS:

  • Initial trade risk was $204,000 or .41%. Current trade risk is $97,000 or .19%. Current trade profits are $168,000 or .34%.
  • UNG seeks to replicate the price movement of NYMEX Natural Gas by holding futures contracts.
  • Although UNG experienced a lower than average trading range, price action and close confirmation was clearly bearish. A higher top was formed by trading 18.88 last week, while Friday’s close at 18.71 confirmed the pattern. UNG formed a VRCB last week, remaining within a trading range of only 1.11. This VRCB could indicate the correction is losing momentum or that the general market is experiencing a lack of volatility after large declines during the previous two weeks, or possibly both. The I.T. trend is still bullish and we believe this correction will stop within our downside price target range. Our break-even price of 18.35 was within three cents last week; look to cover 20% at this price.

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