Three important commodities that help us assess global activity are all pushing lower.
Oil is clearly weak. Thursdays’ move down was sharp and the commodity has now failed at the down sloping 200-day moving average. Notice the momentum shown on the PPO has just gone negative which looks very bearish. At this point, the chart looks to be headed lower.
The second chart of concern is Copper. Copper has looked weak for a while. While this daily chart is weak, one of the big concerns is the long-term trend for copper looks to be within a few days of testing a major long term up trend shown on the second chart below.
This is a good place to expect support to show up, but the momentum has just rolled over near zero as shown on the PPO indicator. This usually implies very weak price action and lower lows can be expected. When Copper is pointing down below the zero line for momentum, it is an important indicator of weak global demand.
The next chart is Lumber. Lumber really needs to hold $300. The problem on this chart is the more times the lumber price continues to fall to that level, the more likely the price eventually fails there.
Looking at lumber on a long-term chart, we can see the $300 level is very important. The PPO indicator as shows significant weakness in lumber prices by rolling over under the zero line. Lumber breaking below $300 is usually a sign of weak economic conditions so stay tuned.
With these charts declining quickly, and the longer-term indicators look like more weakness ahead, this is an important time to have a plan to protect your portfolio. Based on the chart of the $SPX, the above indicators are confirming the weakness in the S&P 500. This week, the Month of May already has a higher price than April and a lower price than April. This is called an outside bar and is usually associated with a trend reversal.
Caution is warranted with everything lining up this coherently.