Commodity Weekly 17 September 2013

S&P GSCI Total Return Index – Daily Chart

Market has failed ahead of 5165/85 as expected and is heading back to its 200 day ma at 4848

The S&P GSCI Total Return Index has recently failed just ahead of 5165/85 and has spent the past week merely consolidating sideways to lower to leave our outlook unchanged. The 5165/85 band is the location of the 61.8% retracement of the move down from 2011. Near term risks are for a slide back to the 4848 200 day moving average, where we would expect to see some consolidation.

We recently reverted to neutral – the market has seen very little follow through on a break of a significant downtrend and this has all the hallmarks of a false break. Failure at the 200 day ma at 4848 would see prices slump to the 4 month support line at 4674.

Only a move above 5185 would imply ongoing strength to the 5400 2012 high, and failure would see the market head back to the previous range circa 4800. We are biased to the latter scenario and suspect we will see the market ease lower in its range.

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