Times in the past I have noticed that when a certain resource group starts making extreme moves, it can spill over into other markets not only in their own group but also into other resource groups. I am sensing this occurring now.
Too many markets that have consolidated to form a base on their daily charts have failed. Cocoa did so Wednesday. Coffee Thursday. I suspect sugar and orange juice are next. The only one holding its own is cotton. But it isn’t stopping there.
It has already reached the grains with wheat being the leader. It failed support it had been forming for weeks yesterday with a collapse similar to coffees. Corn violated its near term up trend yesterday and suggests it will be next. Meal is flirting with its current contract low. Where it was holding two days ago is where beans held yesterday. I suspect beans will follow. The only one that is trying to hold is bean oil so you have to ask if that will be next too. And in the meat complex hogs failed its support theww days ago and has sold off since.
Now what makes it difficult is that all these markets are doing this at long term lows. So is this a “blow off” or more? And you have to ask, what about those markets that have been rallying and are in or near resistance areas? i.e., gold, silver, feeders, cattle, cotton?
Bottom line too repetitive a market behavior is occurring in too many markets at the same time. When I have seen this in the past it has signaled more of the same as the momentum of the markets take over and you end up with extreme moves that would not normally occur if isolated to one resource group. So is another “feeding frenzy” starting?
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