Which Metal is Best for Making a Pitchfork

Andrew’s Pitchfork has been extremely useful in discerning the price movement at a larger scale in the metals complex. Looking at the monthly charts of the major metals, Gold, Silver, Copper, Platinum and Palladium using this tool tells an interesting story.

Copper,$HG_F

Copper rose from its bottom in 2009 and drove quickly to the Median Line (ML). Since arriving there, it has been oscillating around it and now look to be drawn back to it again. Other indicators, a falling Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) indicator agree. But notice that the ML is trending higher as are the Simple Moving Averages (SMA). This indicates a pullback for now, not a reversal.

Palladium,$PA_F

Palladium had the same move off the low to the blue ML, but has moved far enough away from the gravity of the ML to be drawn to the Upper Median Line (UML). Its oscillations have created a second Pitchfork in purple where it is now testing the Lower Median Line (LML). If it falls sufficiently below this purple LML then the gravity of the blue ML could draw it lower. This would take a move below about 675. From the Pitchfork structure Palladium looks a bit stronger than Copper.

Platinum,$PL_F

Platinum had a slower move from the low towards the ML and is now stalling as it approaches. It has not fallen enough to be drawn to the LML yet and the rising RSI supports it heading as it continues to struggle towards the ML. A move below about 1600 would suggest a run to the LML, until then look higher.

Gold,$GC_F

The Pitchfork for Gold has it moving to UML after riding the ML for 2 1/2 years. With the rising RSI and MACD it has support to get there.

Silver,$SI_F

It is Silver that is the standout in the Andrew’s Pitchfork analysis. It moved off of its 2009 lows to the ML and then after some bumping it has rocketed up to and through the UML. The slight stumble at the end of 2009 created a second purple Pitchfork and it is now through the UML for that as well. The tool would predict that Silver will consolidate along the blue Pitchfork until it reaches the purple one where it can move higher, or that a flat out pullback will happen.

Copper and Palladium looking tired while Platinum and Gold are looking higher, with Silver in a league of its own. The questions remain about how high Silver can go, even Andrew’s Pitchfork suggests any pullback to be temporary. But the question is, with Silver the only metal that is trading beyond the UML which metal would you be most likely to sell? Or put another way, are there metals that stand to have better short term returns than Silver? Investing and trading are never about 1 stock or commodity at a time. What is the best way to play this complex? I have my ideas and none of them involve being long Silver right now. How about you?

As always you can see details of individual charts and more on my StockTwits feed and on chartly.)

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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