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By Jim Wyckoff
RealMoney.com contributor
2/15/2008 1:16 PM EST
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Most raw commodity futures markets saw another bullish upside surge this week, led by a strong rebound in crude oil futures prices, which pushed above $96 a barrel Friday.
The Continuous Commodity Index, which is a basket of around 20 major raw commodity futures markets rolled into one composite price index, soared to another fresh 35-plus-year high this week, highlighting the stunning appreciation in raw commodity prices the past few years.
Crude Oil Leads This Week
Crude oil futures on the New York Mercantile Exchange this week reversed a price downtrend on the daily bar chart and pushed above several key technical support levels as prices poked above $96 a barrel. The crude market remains a big-brother leader for many of the other raw commodity futures markets.
Indeed, if crude oil prices continue to appreciate and move to all-time highs above major technical resistance at $100 a barrel, then it's likely other commodity markets -- including precious metals, grains and international foods futures -- will also hit or challenge historic highs.
Liquid energy markets got some fundamental support this week from cold weather gripping a good portion of the U.S. and driving up energy demand. News that oil producer Venezuela is planning to shut off exports to the U.S. was another bullish fundamental factor in the crude market this week. Venezuelan strongman Hugo Chavez ratcheted up his anti-U.S. rhetoric this week following recent oil-related court decisions that favored
Exxon
(XOM)
over his country.
Importantly, crude oil traders note a seasonal phenomenon that is about to occur, namely crude and gasoline prices usually rally during the March and April timeframe. The liquid energy bulls this week wanted to get an early jump on that bullish seasonal phenomenon.
Wheat Leads Other Grains Higher
The wheat futures markets have seen an extraordinary bull run the past several months. New all-time highs have been hit in all three U.S. wheat futures markets -- Chicago soft red winter, Kansas City hard red winter and Minneapolis hard red spring futures. The monthly continuation chart for nearby Minneapolis wheat futures is one example of just how powerful have been the price rallies in the grain futures markets.
Gold Pauses
The gold futures market backed off a bit this week on some profit-taking pressure, but no chart damage was inflicted. The bulls still have the solid near-term and longer-term technical advantage. With crude oil futures prices pushing sharply higher this week and the U.S. dollar weakening significantly against the other major currencies this week, gold futures are poised to make another solid push higher in the near term, including a challenge of major psychological resistance at $1,000 an ounce.
Fresh speculative money from individual traders and pools of speculator monies (called funds or index funds) have helped to propel this latest surge in raw commodity futures prices. Investors need to keep an eye on the Continuous Commodity Index. When that index starts to back down significantly from historically high levels, then that will be an early warning signal for investors that the major bull market run in commodities has hit a peak.
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At time of publication, Wyckoff had no positions in the stocks mentioned, although positions may change at any time.
Jim Wyckoff is a senior market analyst for
TradingEducation.com a free educational Web site. In addition, Wyckoff writes a blog offering current market commentaries every morning on
TraderBlogs.com. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Wyckoff appreciates your feedback;
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