Leon Tuey for The Gold Report - Wed, Mar 2, 2016

Commodities: Early Signs of Bottoming

Veteran investor Leon Tuey says he believes, contrary to conventional wisdom, the economy is not heading into recession and commodities are showing early signs of bottoming.

Reuters/Jeffries CRB Index, Quarterly Chart

Among endless concerns, one of the major worries for investors is that the world is about to slide into a recession. As always, they find arguments to support their own biases. They point to China which is leading the world to the Hades, plunging commodity prices, the strong U.S. dollar, earnings contraction, negative interest rates, Brexit, etc. Also, they argue that despite years of monetary easing, the recovery has been lackluster at best. They conclude, therefore, "the central bank is running out of ammunition." How ignorant and how na´ve!

If the merchants of doom stop flapping their gums and "listen" to the market, they would be far more upbeat on the economy. This year, Copper, Lumber, and Oil are showing signs of bottoming. Moreover, Transportation, Basic material, Consumer, and Industrial issues have outperformed the S&P. If a recession is looming, why would the economy-sensitive sectors show positive relative strength? Two months are already gone and only ten months are left in 2016. When is the recession?

Please look at the following charts and comments closely and the conclusion is clear. The economy is not heading into a recession. Moreover, global growth, particularly the U.S., will prove better than most think. When investors, sitting on a mountain of cash, come to their senses, the market will explode on the upside. In fact, I believe the market has already bottomed and the bull market has resumed.

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Leon Tuey is a veteran technical analyst.

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This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment.

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All images/charts courtesy of Leon Tuey

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