Friday, February 18, 2011

Abigail Doolittle: Commodity Complex to Crumble

Aibigail Doolittle of Peak Theories Research is now calling for a collapse of the entire commodity complex (and strength in the dollar). Specifically she writes:
- Similar to the possible decline that may befall the grains, it seems that many dollar denominated commodities are setting up for a comparable collapse.

- Specifically, the charts of cotton, crude, copper, coffee, platinum and palladium, among a few others, are starting to look ripe to drop at some point this year.

- Considering there are technical reasons to believe that the dollar may climb between 5% and 10% from current levels by mid-year, it is such a potential pop up that may cause commodities to crumble in 2011.
Doolittle's analysis dovetails nicely with my view that is appears most of QE2 is not making it into the monetary system and is ending up as excess reserves. If Bennie isn't getting the money into the system, the system collapse because it needs the new money to keep it propped up.

Doolittle is a very good chart reader and is obviously detecting the early signs of slackened demand/buying support.


  1. How's that "Silver to weaken vs. Gold" call from last week looking, Abby?

  2. I thought that your view was that fed money printing *was* making its way into the economy, and hence your call for large price increases and inflation later this year. Now I am confused that you do *not* think that most of QE2 is making it into the monetary system? If you wouldn't mind could you offer a few sentences to clear my thinking process? Thank you.

  3. Interesting. But you mentioned in a previous post that this does not include gold?

  4. Hmm, but silver went on much stronger than she anticipated. What happened there? The AU/AG ratio is now at 43!! I like the vagueness of your analysis better than specific timings provided by technical analysis. It's not as useful for speculation profit, but doesn't claim to do more than it does.

  5. I believe this could happen, but the dollar has not bottomed in its 3 yr cycle. This will happen sometime this spring early summer and it will be well below 72. Until then coupled with QE2 commodities will rise. Then depending on how much of this free money can control, some commodities will go into backwardation and actually disappear until new price levels have been established which will be much, much higher. Then the dollar will bounce but only because previous contracts will have to be settled in dollars, either thru BK or restructure or default. As long as these crooks can inflate and deflate this situation, sucking the only good capital available over time and not panic anyone (the world players)the only way to protect yourself is thru metals and farm land. This situation is unpresidented and has NO comparable, TA and other forms of predicting the future do not apply!!!The financial world of fiat paper is akin to terrorism and little people like me have no business playing that game, commodities are the only finite and controlled environment available to the public to invest, everything else is can't trust anyone ..period.

    Thanks, I enjoy reading your blog

  6. You know, you guys are brutal. Abigail is one of the best chart readers around. It doesn't mean she is going to get every call accurate. All she can do is detect supply and demand trends, if something cahbges those trends, charts are not going to detect that.

  7. @Anonymous 2-18 10:46

    Money was entering the system up until about the end of the year. That money has not impacted prices yet. It will.

    Of late, the money has been going into excess reserves, so that money won't be impacting the economy.

    Two different pools of funds. One will impact prices, the other won't.

  8. Doesn't make any sense. Just here locally in Indiana I am seeing new home building all the sudden sprouting up and commercial land being bought. On top of that, I had a farmer tell me that farmland just west of Indianapolis sold for $10K/acre! This is real good farmland (dark soil), but you would've never talked about that price 2-3 years ago.
    Money is moving.....

  9. Agricultural sector is very different from the general economy. I think we see farm areas continue to perform well. Speculation wise there will be plenty of ups and downs but over the long run farms and banks facing farmers will continue to perform see growth.

    I just don't see a great amount of value to technical analysis. I expect a pullbacks in a bull market. I expect buying support in a bear market. Saying that there is going to a correction is only natural. The timing of the correction would be very valuable information, but I don't see solid evidence that Abigale gives us such insight.

    Secondly, I looked at the evidence and there were some multi-year charts upwards of three decades with trend lines. The evidence for a major correction in cotton is an 8-year trend line which spans the housing bubble years, the crash, QE1, and QE2. To me, it looks more like cotton tested its multi-year high in middle of 2010 and broke-out with the help and Bernancke printing press. Abigale is calling for it to drop back to that price again based on an 8-year trend line.

    The comments on other commodities just make me feel like I'm reading about black magic. It all goes over my head. Abigale tell me that it's all bearish, but I can't really decide for myself based on the charts she gives me.

    Her 36 month target of 425 for the S&P 500... wow

  10. Charts are worth the paper they're printed on in Silver and Gold, Wenzel.

    Say it with me:


    (Are you sure you don't just have a crush on Abby?)

  11. The fact that silver is whipping golds ass is a "tell" that good ole Abigail may be spot on. Never forget, silver lags gold-than when its good and ready it makes a spectacular move, outperforms gold than they correct. This happened in the 1970's and should happen again. Although with all the manipulation of these markets, silver backwardation, and FED pomo's its easy to toss TA out the window. Its a tough call. In my view, Gold soars to $1650 and Silver soars to $50 by mid May. Than I say its time to "sell in May and go away" embrace paper for awhile and wait for a signifigant correction.

  12. Even manipulation leaves footprints in the charts and tape.

  13. I may sell some of my commodities, but with all the instability in the world, particularly the oil producing parts, I am not willing to sell all.
    I really enjoy the articles on your site thank you.