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We wish all our readers peace and goodwill over the Christmas season
and prosperity in the year ahead.

Advice herein is provided for the general information of readers and does not have regard to any particular person's investment objectives, financial situation or needs. Accordingly, no reader should act on the basis of any information contained herein without first having consulted a suitably qualified financial advisor.

By Colin Twiggs
December 24th, 2015 2:30 a.m. EST (6:30 p.m. AEDT)

Global crude and commodity markets are undergoing a major re-adjustment. A sharp fall in Chinese demand meets surging supply from new resources brought on-stream in anticipation of higher this-time-is-different-and-the-bubble-will-never-end prices.

Nymex WTI Light Crude and Brent Crude are both testing their 2008/9 lows around $35 per barrel. The spectacular peak is likely to be followed by an equally spectacular trough. Support at $35 is unlikely to hold.

Nymex WTI Light Crude and Brent Crude

Low crude prices, low inflation and higher interest rates are all likely to weigh on gold. Breach of $1050 per ounce would signal a test of primary support at $1000/ounce*. 13-Week Twiggs Momentum peaks below zero flag a strong primary down-trend.

Spot Gold

* Target calculation: 1100 - ( 1200 - 1100 ) = 1000

US and European stock markets are better able to cope with the commodity cycle than resource-rich economies like Australia, Brazil, South Africa, Russia and the Middle East.

The S&P 500 found support at 2000 but breakout above 2130 is unlikely at present. Gradual decline of 13-week Twiggs Money Flow suggests a lack of enthusiasm from buyers.

S&P 500 Index

Australia's ASX 200 respected primary support at 5000, suggesting a bear rally to 5400. But 13-week Twiggs Money Flow is also declining. Breakout above 5400 is unlikely. Respect would warn of another decline, with a target of 4600*. Breach of 5000 would confirm.

ASX 200 Index

* Target calculation: 5000 - ( 5400 - 5000 ) = 4600

The most dangerous man to any government is the man who is able to think things out for himself, without regard to the prevailing superstitions and taboos.

~ H. L. Mencken


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