Commodity Momentum: Correction mode
Our momentum monitor has been turning red over the last week indicating that some of the strong positive momentum that we witnessed during January has run out of steam with the need for profit taking and a fresh focus taking center stage. The metals sector remains mixed with silver now seeing negative momentum following a run up since January 10. Gold has been stuck between its 200-day and 55-day moving averages for the past nine days with momentum suffering as a consequence.
Fortress energy has seen the first wobble with WTI crude finding it increasingly difficult to keep up with Brent crude oil which has begun to toy with the phsycological level of USD 120/barrel just like we saw at this time last year. WTI Crude has the potential for turning negative today but traders might be reluctant to become to bearish unless the important support level at ÚSD 95/barrel is breached.
The negative momentum in corn and wheat could potentially spread to soybeans following the slump last Friday after a US government report (World Agriculture Supply and Demand Estimates) surprisingly raised the global inventory levels for this current crop season.