GTX Commodities Index Daily Chart Overbot; Negative Divergence; 2-Leg Bull Flag Pattern

Commodities have been on a tear higher. Traders sing that the commodity train is bound for glory. This is a concern of the Fed since the hot services inflation was expected to subside and retreat to join the subdued goods inflation. However, with oil and other commodities jumping higher, goods may be headed towards services. Pope Powell wipes beads of sweat from his forehead.

The upside orgy in commodities is topped-out in the daily time frame. Price rises for new highs but all the chart indicators are negatively diverged (red lines) and the RSI and stochastics are overbot agreeable to a pullback in the daily time frame.

Price has violated the upper band so the middle band, that is also the 20-day MA at 3634, and rising, is on the table. There is some congestion at 3680-ish so that may serve as a downside destination as she rolls over.

The blue lines show a textbook two-leg bull flag pattern. The first leg is 356 points, then the sideways consolidation occurs with a downward bias forming the flag, or pennant if you prefer, and the second leg begins at 3477-ish. Adding the 356 yields 3833 as the upside target and bingo, it is achieved satisfying the chart pattern. The orange diamond pattern also appeared as price was chopping sideways. Many assume this is an automatic reversal pattern but you will see price rise as much as fall out of the diamond.

GTX is topping-out now in the daily time frame and will begin a multi-day down move. The only thing that can change the outcome is news hitting the wires. If news causes the dollar to weaken, commodities will pop higher. If the dollar strengthens, commodities will become soggy.

Even though commodities are set to drop, you can check out CRB which is in the same boat, this is in the daily time frame. Bring up the weekly chart for GTX and you see that the RSI and MACD remain long and strong. The histogram and stochastics are cooked with neggie d on the weekly chart so they will conspire with the negativity on the daily chart to spank price lower in the daily time frame.

The RSI and MACD on the weekly chart, however, want to see another higher high in price going forward. Thus, GTX will stumble in the days ahead and go into retreat perhaps for a few days or week or two, but then price will recover and come back up for another higher high in the weekly time frame.

Keystone is not playing any commodities right now. You can look at DBA as a potential short going forward on the daily basis but you must remain nimble. Traders will want to see the Housing Starts on Tuesday morning and hear from the Fed on Wednesday. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added 9/18/23, Monday Morning, at 5:17 AM EST: GTX ends last week at 3793 with an orgy high at 3826. The daily chart is topping-out with neggie d but the weekly chart remains long and strong. GTX will top-out and retreat for a few days perhaps a week or two but then rally again on the weekly basis to print new highs.