ELAM: Commodity prices break out

Those are the same experts who think supply and demand drives oil prices. That is not the case as we have had plenty of supply since oil picked itself up off the $35 January February 2016 low. And now oil has hit a three year high.

The commodity rally we have been expecting and predicting is now underway. West Texas Intermediate closed at $68.15 this Thursday, finally vaulting past the $66 resistance level also discussed here.

The Bloomberg Commodity Index hit a new high yesterday. And it was joined by the Ten-Year Treasury Yield. The ten year yield will shortly test its overhead resistance at 3 percent. It closed today at 2,914 percent. Readers will also recall our prediction that rates will be rising much faster than the FED believes possible. The market not the FED sets interest rates.

Gold is knocking on its resistance level of $1,360. Silver broke out rising 45 cents on Tuesday.

Wall Street Journal Thursday April 19, 2018

Permian producers are starting to encounter congested pipelines and shortages of materials and workers-bottlenecks that have caused some investors to sour on the region. Some energy executives question whether sky-high forecasts (regarding production) are achievable.

I have been particularly concerned about the poor performance of the Energy Service Sector represented by the XES ETF. It has been trading near the 2009 financial crisis low. It finally broke above $16 closing today at $16.86. The Energy ETF XLE is on a tear rising to $74. Next break out test will be the January high of $78.

We expect a rise in commodity prices into at least May before any serious pullback. All sectors are in gear with rising interest rates, higher commodity index prices and rallies in both gold and silver and mining shares.

And now for the Heroine of the Week Story. Tom Wolfe finally got Chuck Yeager his well deserved public adulation in “The Right Stuff.” The book was about the original Mercury Seven Astronauts, of which Yeager was not included. Incredibly he was excluded due to lack of a college degree, he was a USAF Officer. It was Yeager who piloted Glamorous Glennis, the Bell X 1 to break the sound barrier back on October 14, 1947. Wolfe related that his slow West Virginia drawl, no matter the emergency, inspired pilots to remain calm at the controls. Tammie Jo Shults was a US Navy F/A 18 Hornet combat instructor, playing the aggressor. She landed the SW Airlines Boeing 737 on one engine to the relief of all passengers on board. Tammie Jo, welcome to the Chuck Yeager Hall of Fame.