Commodities Stabilizing Like It’s 2013
•Commodities have improved to their most attractive since August 2013.
•Specifically, the Difference Curve of Monthly Commodity Ratings (a Diffusion Index) has improved to neutral (zero) for the first time in two years.
•That August 2013 improvement was followed by 11 months of flat to improving commodity prices (until July 2014 when the recent decline began).
•This raises the potential for a longer-term stabilization in Commodity prices than we had previously expected.
•This has implications for a Weaker US$ and stronger relative performance among Energy and perhaps Mining stocks.
•Because our long-term measures of Momentum remain low (for most commodities), we do not expect a sharp advance, but rather a longer period of Stabilization with an upward bias.
•US Equities – As noted in our Aug 23 alert equities stabilized near the bottom of our expected range. Stabilization is ongoing and we continue to expect a rally into year-end.