Palladium Flirting with Final Support

It is at the late 2021 low and broke long-term support above this month. I am not shorting palladium because Russia is a major producer and geopolitical outcomes could be wild, but rather as a leading indicator for the Nasdaq.

Palladium Breaks Support

Here are prior posts where I used palladium as a signal to short Nasdaq.

Who Wants to Short Commodities?

Nasdaq and Palladium

The Top is Coming

There can be a large gap in time between the moves. I view palladium as the leader here because it broke a major topping pattern. If it recovers, perhaps Nasdaq is leading short-term. A palladium and Nasdaq top are consistent with what I expect for a bear market and transition to new bull market with new leaders.

Dominoes Lined Up and Falling

ES traded down to a support level this morning. THe Dow Jones Industrial Average lost the 1929-2000 trendline. Palladium is threatening a top completion and breakdown.

Binance is in trouble and it is the market:

Platinum:

Palladium

Could give a new signal to short tech and growth if it loses support.

Palladium Again

A breakdow is bearish for the Nasdaq. If it falls into year-end, the yearly candle will be a gravestone.

Palladium and Nasdaq, Unhappy Together

My bearishness is intensifying.

Bonus: another sign that platinum's time is coming.

This chart from Slope.

From Stockcharts, the line from the 1980 high hits 2000 and the recent high:

Related posts:

Palladium Signals Top at $3200

The Top is Coming

Palladium Still Calling Tech & Palladium Top

Is The Bull Market Over?

2020 pre-covid panic: Palladium's Pendulum: A Third Top in Time and Price?

Another Positive for a Rally

Palladium pops. I am not sure why it works, only that palladium and technology are highly correlated over the longer-term. Palladium is much more volatile and sometimes moves by itself, but usually reattaches.

Here's the recent history of QQQ and the physical palladium ETF.

Down Goes Palladium

March 7: Palladium is done

Commodity Reversals and Copper Gold Update

Price collapse: who's expecting it?

Gold-copper is at an important juncture. It has been rising, but hasn't broken out yet. However, with recent volatility being what it is, the ratio could break out any day. the breakout delta from the current level is 6 percent. That is, if gold rises by 3 percent and copper falls 3 percent, the ratio breaks out. An upward breakout in gold/copper signals deflation or possible stagflationary recession that is a monetary crisis, hence gold outperforming.

Checking in on Palladium

So far so good. Four days ago : Palladium is Done

Here is the same, with crude oil too:

Palladium Fails Again

Palladium is Done

I missed this during the trading day, otherwise I would have shorted at the cyan line. Palladium tagged the resistance line between the 1980 and 2001 tops, the failed and took out the 2001-2018 trendline on the way down. A 450-dollar, 13-percent reversal. Failure here is negative for stocks. It doesn't mean anything for commodities. Although a breakout would be signal inflation could get hotter than expected, palladium zigs when other commodities zag. It made a new all-time high today, while other metals such as platinum languish well off their highs. For my money, platinum is the much better buy here even if palladium ends up breaking out.

Palladium Still Ripping

Palladium shot higher in both of the major tops of 2000 and 2008. The move higher here doesn't yet suggest Nasdaq will follow it. Should palladium breakout, that might be the worst-case scenario for the Nasdaq because it probably means inflation is well into the double-digits.

Like 2008 All Over Again: Catalytic Converter Thefts Soaring

Imagine if the Federal Reserve hadn't raised rates after the dotcom bear market completed. They left rates unchanged until 2008. Then you have some concept of how much trouble they are in. When I say they are trapped, I'm not talking about policy. They can do whatever they want. I'm talking about results. They do not have good options for policy results.

National Insurance Crime Bureau: Catalytic Converter Theft Skyrocketing Nationwide

Denver Post: Catalytic converter theft crackdown: Colorado lawmakers aim to slow surge, provide relief to victims

Seattle Times: WA lawmakers consider bills to crack down on theft of catalytic converters

KGW 8: As catalytic converter thefts rise 3,800% in Washington state, lawmakers look for solutions

Twin Cities Pioneer Press: St. Paul strengthens ordinance against catalytic converter thefts, calls upon state to do the same

KMIZ 17 (Missouri): Catalytic converters stolen from Fulton-based non-profit

KATU 2: Bill cracking down on catalytic converter thefts goes into effect in Oregon

WTAJ Altoona: Two busted after failing to cut catalytic converter from BMW in Huntingdon County

Baizuo government is letting criminals run wild and inflation is providing new theft targets. I think a junkyard might have been robbed in my rural hometown around 2008, but now there are reports of theives going all over the area stealing catalytic converters. The Democrats are the party of criminals and inflation. Republicans are not much better, but at least they put thieves in prison.

Palladium Bounced

Daily moves aren't particularly useful, but maybe this is hinting about a Nasdaq bounce.

Commodity Turn: Palladium on the Line

The blue trendline goes back to the early 2016 low in commodities. Palladium is highly correlated with technology over the long-term, with lags of as much as 12 months give or take. I view a breakdown in palladium as positive for commodities in general because palladium has typically been a counter-cyclical performer that does best during commodity bear markets.

More immediately, a break of that major support could be imminent.

Palladium Crushed With Tech

The h-pattern reemerges. A break lower would signal the selling in technology probably isn't finished given the continued correaltion between two. They sometimes diverge for many months and tops have come more than a year apart before so it's not a take it to the bank signal, but they are correlating again and palladium should accelerate lower if the h-pattern produces a new low.

More on Palladium

Back in February 2020 I wrote a few posts on palladium because it looked like it was running into a peak. Even without coronavirus, the market looked like it was peaking. Palladium and the broader stock market's refusal to drop as coronavirus was spreading was warning that maybe this risk was overblown or would be ignored. At times I wondered if there would be a final run higher first. Instead, the market would enter a meltdown phase.

February 25, 2020: Market Correction: Done or Ready to Run?

February 19, 2020: Palladium Clock Adds a Tick and a Tock

February 16, 2020: Palladium's Pendulum: A Third Top in Time and Price?

The difference between then and now is that palladium isn't running to a new high, it already peaked.

Here's another interesting corrleation with palladium, this time the palladium-gold ratio and the U.S. Dollar Index.

There's definitiely some disconnect in the short-term, but overall those charts are moving in the same long-term direction. All relationships can breakdown, but this chart reminds of the Milkshake Theory. If the U.S. Dollar Index rises strongly because emerging markets default on their dollar-denominated debt, the Federal Reserve will likely be doing QE7, interest rates will be low, tech stocks/U.S. market will be rising as a safe heaven from overseas chaos. Something to file away if what looks like a short-to-intermediate term rally in the U.S. dollar turns into a large bull move.

Nasdaq and Palladium

If this relationship holds, tech is gonna tumble in the coming months.

If I had to put a target on palldium, I'd say $900-$1000. Touching the bottom trendline in the above chart would probably mean an eventual low around $500-$6000, depending on when it hit that rising support line.

Here's another look at the above chart, going back to before the 2000 top. If this is a top like in 2000 and 2008, palladium is going to accelerate to the downside.