Commodity Index (CCI) seems to be basing near the key 500 level; Current bounce targets 521.14

CCI found support at 503.24 (7 Aug low) ahead of the key support zone between 499.99 (28 Jun YTD low) and 502.28 (1 Jun 2012 low). This is also near the significant 50% retracement of the entire rise from 322.53 (Dec 2008 low) to 691.09 (Apr 2011 high). While the daily studies are improving, there is scope for further recovery towards the 521.14 lower ceiling (22 Jul high). Clearing the latter is needed to confirm a double bottom at 499.99/503.24 and trigger further gains towards the 200 day moving average currently at 544.71.

However, failure to hold the 499.99 key support would negate the upside and accelerate the 16-month downtrend from the April 2011 peak towards 477.39 (May 2010 low, shown on the monthly chart).

The latest price action in CCI has been encouraging. Bears tested the 2012 low at 502.28 (Jun 2012) near the key 50% retracement of the entire rise from 322.53 (Dec 2008 low) to 691.09 (Apr 2011 high) to stall at 499.99 (Jun 2013 low). The US Dollar has been sliding for the last five weeks, which could provide a catalyst for the commodities to stabilize here. We need to see bullish momentum on the daily chart to suggest basing.

Potential 3-1/2 week Expanding Triangle Top Forming; Targets 8-month Bull Channel Support near 15230

DJIA has been consolidating within a potential 3-1/2 week expanding triangle (a potential topping pattern) under the record high at 15658 (2 Aug). The bullish momentum seems to be waning as potential 3-month bearish divergence (from May 22 and Aug 2 highs) is forming. While the 15658/the rising trendline (from 18 Jul high/1/2 Aug highs) resistance zone caps further gains, a push below the key 15405 support (26 Jul low) would suggest completion of the expanding triangle topping pattern and trigger more downside towards 15230 (38.2% of 14551/15658 rise) which is also near 8-month bull channel support (from Nov 2012 low). Further weakness below the latter would expose the 5-month bull channel lower bounds (19 Mar/19 Apr/24 Jun lows) currently at 14615 for a retest.

However, if the 15405/15230 support zone holds, consolidation would continue. An upside break above 15658 would confirm a higher base and stage the potential upside target at 16250 which is near the converging point of the 53 month bull channel (from Mar 2009 low) and the aforementioned 8-month bull channel upper bounds. 

The long term uptrend remains intact while the 4.5-year bull channel support holds.