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Just two days after I wrote about how no one was paying attention to gold, it went and rallied massively. Now everyone is paying attention to it! I still believe that the gold scenario I drew on the chart Monday morning will come to fruition: It will get through those resistance lines, then pull back, mill around for a while and eventually head upward again. I don't expect it to surge to my $720-$730 target in one fell swoop. The most interesting part is that for the first time yesterday, the gold stocks participated -- and many with notable volume. That usually means people believe the move this time around, or at least they want to play it. That hasn't been the case up until now. The good news is that my inbox isn't yet filled with questions about the move in gold or gold stocks. I've seen one or two stragglers, but that's it. I will be sure to let you know when the email starts flooding in on this. It always does. And take a look at oil. Don't you just love the way the Saudis tell us, at the lows, that they have no intention of cutting production? Then not even one week later, the U.S. government says it's once again ready to add to the Strategic Petroleum Reserve. If I knew our government folks were such good energy traders (you might recall they stopped adding to the SPR in July), I might have given them some money to manage! It's uncanny the way they have picked the tops and bottoms. I will stand by what I said on oil two days ago: We are in the midst of an oversold rally, and when the rally is done, I expect oil to come back down. We'll see what sort of momentum it gets on the downside. It took six weeks for investors to hate oil and love the airlines, so they won't reverse course immediately. When oil was doing well about six weeks ago, Chesapeake Energy ( CHK) did a secondary offering, right at the highs. It promptly fell from $34 to $27. Tuesday AMR ( AMR) did a secondary offering . As Doug Kass on Street Insight would say, it makes you say hmm. However, I want to show the chart of natural gas today. Yesterday in Columnist Conversation , I said it is kissing resistance and at a downtrend line.
Maybe it will blast through that downtrend line and come back down to retest it, or else it will back off from here and then go through it. I've been a bull on natural gas for a long time (some would say too long!), but even I think a move from $6 to $7.50 in three days must be digested and is unlikely to continue at this pace. So turn your eyes away from energy for a minute and look at the commodity that no one seems to mention anymore. Two weeks ago, everyone was screaming about copper. Even I made a fuss about it, saying that copper had been declining for months and people were just starting to notice it.
But now, no one even mentions copper anymore, and to me, it looks to be making a little bottom. It is very early and will probably have fits and starts, but don't you find it curious that all that copper chatter has ceased so quickly? I do. And the stock market? It goes out of oil and into tech, then out of tech and into oil. So when people go back into tech, will they be done with oil?
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