COMMODITIES : how important is this bounce?
​Are Commodities confirming the Equity bounce? This is a possible explanation for the recent market action. This is not our interpretation though. First, there are no reversal signals yet on short/medium term Commodity charts. The recent action may actually almost be over, as we are approaching the first resistance showing on weekly charts. Second, Commodity prices have a tendency to rise at the end of the business cycle. Rising Commodity prices do not mean that Equities will join new highs. In a normal business cycle, it means, on the contrary, that the economy is overheating, and Central banks about to raise interest rates. It is hard to say whether we can expect the same behaviour in this cycle. In a deflationary environment, hard assets should not do well. But there is very little experience about deflationary periods.
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