Oil and commodities recovery

Troy Bombardia
2020-08-19
The U.S. stock market is now at all-time highs. Extremes happen in both directions: what went down in a straight line (without any decent bounce) also went back up in a straight line (without any decent pullback). And it's not just stocks that are recovering.

The U.S. stock market is now at all-time highs. Extremes happen in both directions: what went down in a straight line (without any decent bounce) also went back up in a straight line (without any decent pullback). And it's not just stocks that are recovering. Oil is back above its 200 dma after the worst plunge in history and commodities are recovering as well.

Here's WTI oil's distance from its 200 dma:

When oil cycled from being far below its 200 dma to crossing above its long term moving average, oil usually pushed higher over the next year:

Since these historical dates marked the end of economic slumps, the S&P pushed higher in the coming months as well:

As for gold, this led to poor returns over the next few weeks and months:

The CRB commodities index also reclaimed its 200 dma after a sharp plunge:

When this happened in the past, the CRB Index usually pushed higher over the next few months:

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