Large Entities Creating Major Breakouts In Crucial Markets

Today acclaimed commodity trader, Dan Norcini, told KWN that well-financed, very large entities are creating major breakouts in various markets as they position themselves ahead of an important shift.  Norcini also issued this warning, “... there is a great deal of money on the sidelines and this means we will see some violent action as these markets move to the upside.” 

Here is what Norcini had to say:  “Obviously, Eric, we would not see these chart patterns breaking out the way they are (see below), unless large, well-financed, and well-connected entities were positioning themselves ahead of what they see coming down the road.  This is simply too large of a move for this to be some momentary blip on the radar.”

“It took a lot of firepower to break these markets through these resistance levels.  We have had two days of solid action, along with good volume, on this breakout and it signifies a change in direction.  It also signifies that some very large players anticipate something very significant down the road.

What happened yesterday was word about the crop tour sent both corn and soybean prices strongly higher.  This also dragged wheat along for the ride.  The supply seems to keep shrinking as each successive yield estimate comes in with a lower number.

Once the market comes to grip with the actual supply number for this year, the focus will shift to the demand side of the equation and whether or not the market is doing its job of rationing supplies.  One thing is certain - we, the consumer, are going to be reeling at the grocery store very soon.

Take a look at my Grain Composite Index - if you thought grain prices were high back at the peak of the commodity bubble in 2008, you haven’t seen anything yet!  The Index is now firmly above 2008 high.

The strong day in the grains, combined with big moves in both gold and silver, and another bullish call on oil from Goldman Sachs, has sent the CCI (Continuous Commodity Index) through the top of its recent trading range.  If the CCI does not surrender its gains before the end of the week, and remains above that resistance level, from a technical analysis perspective, the trend in commodities will have shifted to UP.

Note how the top of this recent trading range has been in the same zone as the 61.8% Fibonacci retracement level. That makes yesterday’s move even more significant.  I do not see much in the way of overhead resistance past this point until we get closer to 582 - 585 in this index.

Shifting a bit to the mining sector stocks - the HUI has pushed past 440, and closed above that level.  It is on course to make a try at heavy resistance centered near the 460 level.  If the HUI has a weekly close above 460, it portends a trending move to the upside which would initially target 540 -555.

Silver has cleared heavy resistance at $29 and is closing in on the last level of chart resistance at $30.  If silver breaks $30, look for the momentum funds to come piling into this market.

The bottom line here is that these large, well-financed entities are now anticipating inflation for the foreseeable future.  This means the ‘risk on’ trade is back in vogue, and we should see higher prices for gold and silver going forward.  I would also add that there is a great deal of money on the sidelines and this means we will see some violent action as these markets move to the upside.”