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Notice the following on the weekly chart:
-- Prices are near their lowest level in three years
-- Prices have fallen 54% since their high during the summer
-- Prices are below all the SMAs
-- All the SMAs are moving lower
-- The shorter SMAs are below the longer SMAs
BUT:
-- The MACD is oversold, and
-- The RSI is oversold
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Notice the following on the daily chart:
-- Prices have been dropping for 5 months
-- Prices have continually moved through previously established lows
-- All the SMAs are moving lower
-- The shorter SMAs are below the longer SMAs
-- Prices are below all the SMAs
BUT
-- The MACD is rising, and
-- The RSI is weak
Bottom line: Three indicators -- the daily MACD, the weekly MACD and the weekly RSI have been signaling a possible reversal for some time. Yet, that reversal has not materialized. Why? First, indicators are not fool-proof; they merely give clues to what might happen. Secondly, there is a fundamental change occurring in the commodities market. Traders are contemplating a prolonged slowdown and the impact of that slowdown on commodity prices. Major commodity companies are reporting layoffs (more on that later today). That is having a pronounced effect on prices that is trumping technical considerations.
