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Daily Commodity Spot: Lack of Correlation Between Currencies, Precious Metals, Crude Oil


A breakdown of the day's six most active commodity futures.

Today's Highlight: Tuesday's one highlight among commodities was a lack of correlation among them. Gold and the dollar index were both under pressure. Crude probed a fresh relative high while currencies were glued to their prior session opens. Wednesday's session should light a few fireworks.

1. Dollar Basket
March Contract; DX (UUP, UDN)
Tuesday's "ineffectual pessimism" gapped down, probed prior lows, and spent the entire session in negative territory; - all without closing under the morning's low. Closing above 80.40 would gain traction initially to test 80.85. Its recovery would target 81.25 and then new relative highs.

2. Eurodollar
March Contract; EC (FXE)
Tuesday's gap up probed above Thursday and Friday's highs, but held under Wednesday's highs, and essentially extended the narrow range in-play since last Tuesday afternoon. Tuesday's price action not only didn't upset last week's pattern of "ineffectual optimism," it was more of the same. Closing under 1.3070 Wednesday, confirmed under 1.3055, would trigger a bigger decline targeting 1.3015 and 1.2975.

3. Gold
February Contract; GC (GLD)
Thursday's close under the 1610.50 sell signal finally produced its first real probe under 1600.00. Also closing under 1585.00 maintains the drop's next lower target at 1575.50. The gap back up to Friday's 1607.50 close would start to be an attraction if 1598.00 were recovered first.

4. Silver
March Contract; SI (SLV)
Gapping down Tuesday to 28.81 never got out of the gravitational pull back up to Friday's 29.05 close. But filling it intraday held, and its test reacted back down to session lows. The objective to probe under 27.90 remains in-play so long as bounces were now to hold 28.85 resistance.

5. 30-year Treasury
March Contract; US (TLT)
Extending slightly higher from Tuesday's gap up quickly tested 142-12. Its probe as support last week by a lower low would have predicted a much bigger downleg underway if repeated one extra day. It was tested as resistance during Tuesday's "inside day." Gapping down Wednesday under 142-05 would be likely to resume the decline. Otherwise, the corrective bounce still has room to test 143-04.

6. Crude Oil
March Contract; CL (USO)
Monday night's brief weakness down to 99.52 held well above the 99.40 bounce limit. Resistance at 100.00 was soon recovered on the way to fresh highs at 101.88. Pullbacks must now hold 100.30 to maintain this leg's 103.00 target.

Editor's note: Rod's analytical techniques are designed to efficiently identify targets and turning points for any liquid stock or market in any time frame. He applies his techniques live intraday, primarily to S&P futures, at RodDavid .com.

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