Are Commodities At A Major Turning Point? [United States Oil Fund LP (ETF), ProShares Ultra DJ-UBS Crude Oil]

money and investingToby Connor:  As most of you probably know, I have been expecting the CRB to form a major three year cycle low sometime next summer. However I’m now starting to see some things that might indicate that major cycle bottom is going to occur earlier than I expected.

Since oil is the main driver of the CRB, and most commodities will follow its lead I’m going to focus on the action in oil. Notice in the next chart that oil has now reached oversold levels similar if not more extreme than the previous two 3 year cycle lows.

oil weekly

Sentiment in the commodity complex is also at levels last seen at the previous multi year cycle turning points.

commodity sentiment

Source: sentimentrader.com

After breaking through support at $1180 gold has now dropped far enough to test the 61% Fibonacci retracement of the previous C-wave rally. Yes, I have been expecting a move all the way back down to $1050, but it’s entirely possible that the drop may come up $100 short and bottom at $1150 if the CRB is putting in a three year cycle low right here and now.

gold retrace

I believe oil is the key. When it finds its intermediate and yearly cycle bottom the rest of the commodity complex is going to turn back up. And in Elliot wave terms oil has started its fifth wave down.

EW oil

We’re only days away from a bottom, and it’s even possible the bottom will form exactly on election day like it did in 2012.

The movements in currencies are also connected very strongly with the commodity cycles.

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