No Inflation Yet

By Dominic Cimino of Preferred Planning Concepts
August 9, 2013

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Back on May 28th, I wrote an article entitled, Charts Imply the Threat of Deflation is Still Present. This is an update of the various charts that I am hoping will provide insight into the inflation/deflation debate. The interpretation of these charts should provide another gauge of inflation, and will complement the analysis of governmental reports. After reviewing these charts, it appears to me inflation remains in check.

The first chart is the Goldman Sachs Commodity Index. The bearish trend channel pattern, shown in red, remains intact. It's hard to imagine inflation without commodities in a bull market. We should continue to watch this chart for any upside break-out.

 

 

The next chart is wheat futures. You can clearly see how wheat futures have indeed broken beneath bullish trend channel support. However, I will wait until wheat futures break $6.00 to call a bear market for wheat.

 

 

As you'll next see, crude oil futures are inflation's only supporter in this analysis, and not a very strong one at that. The downward sloping bearish red trend line has been broken, but I think the more dominant trend is a sideways consolidation between $75.00/barrel and $115.00/barrel area. If I'm correct, then crude oil futures have consolidated sideways since the beginning of 2011, and are not yet forecasting inflation.

 

 

Copper futures remain listless and are in fact testing long term support at 3.0000.

 

 

Once they broke out of their sideways consolidation, spot gold prices have retreated significantly. Similarly to commodities in general, gold prices should turn around and move higher if inflation gains a foothold.

 

 

Finally, the U.S. Dollar Index remains benign, having traded sideways since 2008, the year in which it placed its all-time low.

 

 

In conclusion, charts are objective and speak for themselves. According to my interpretation of these charts, inflation remains in check even as global governments have utilized trillions of dollars to prop up their economies. Perhaps deflation remains a possibility that few consider.


Dominic Cimino
Chief Investment Strategist
Financial Advisor
Preferred Planning Concepts, LLC
2800 South River Road #240
Des Plaines, IL 60018

Registered Representative, Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Preferred planning concepts, LLC & Cambridge are not affiliated.


2013, Dominic Cimino of Preferred Planning Concepts, LLC (You can explore the services offered by Preferred Planning Concepts by viewing us on our website at www.ppcplanning.com) Any redistribution, reprinting, or reference to this chart or content is allowed so long as reference to the author and source is acknowledged.

Important Disclosures

Please be aware that this is not a recommendation to purchase or sell any security. This is not a recommendation for any individual or institution to alter their portfolio holdings. Every individual or institution has its own risk tolerance and investment objectives and perspectives.

Any above opinions of the author should be viewed as such. These opinions in no way represent any type of guarantee. Realize that if you choose to invest in securities, investing in securities carries with it uncertainty and the risk of loss of principal. Lost investment opportunity is also a possibility. Investing in securities carries no guarantees.

Past performance is no guarantee of future results. The price movements within capital markets cannot be guaranteed and always remain uncertain. The above opinions are meant to stimulate thought and should be viewed as such. You are encouraged to discuss these views with your representatives if you have any questions or concerns.

Any indices mentioned are unmanaged and cannot be invested in directly.

It must here be mentioned that technical analysis offers no guarantees of future price movements. Technical analysis represents an observation of past performance and trend, and past performance and trend are no guarantee of future performance, price or trend. The price movements within capital markets cannot be guaranteed and always remain uncertain.

Neither Cambridge Investment Research nor Preferred Planning Concepts is responsible for the accuracy of content provided by third parties. All material presented herein is believed to be reliable but we cannot attest to its accuracy.

All charts presented were made available by eSignal, a charting service available to individuals or professionals. Anyone interested in exploring the potentials of eSignal should give us a call.

 

 

 

 

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