After falling for more than 2 years (peaked in May 2011),
the CCI index looks like has found some support. A 15% rally from
the current level to 600 is totally possible even if considering we may be in a
secular bear market.
This follow the 25% rally from the bottom of gold miners
(anticipated as a strong possibility a few weeks ago) and the bullish move in
oil , where 120 on the WTI remains my first target (10% higher from here).
-
The CCI Index has found support at 500, where we
have the 2012 bottom and 2 intermediate tops in the 2010 rally
-
The index has formed 2 distinctive bottoming
candle patterns: a morning star first and a hammer/bullish engulfing
afterwards
-
MACD is clearly diverging on a weekly basis
-
We can count 5 waves done, with wave 5 extended
as it is common in commodities moves (in equities wave 3 tends to be extended)
Alll of this points to a completed move and therefore to at
least a partial retracement. A 38.2% retracement (bare minimum) would push the
index up 10%. My inclination would be for a deeper retracement, to test
previous resistance at 6oo which also coincide with the 50% retracements ( a
15% move from here).
A break of the 500 level and a close below would invalidate
this analysis and point to much lower prices.
Chart1
Chart2
