Commodities Correlated Again...

You may recall Friday the commodity complex was acting very strange, rallying with the Dollar as there is a historical inverse relationship between the two, today the dollar is up slightly and commodities are down, the historical correlation is back on track...

 Here's the channel commodities were traveling in until we got a candlestick that looked like a shooting star (in red) , although the candle is bearish and looks like a shooting star, technically it is in the wrong position, but the bearishness of the candle did send commodities below their channel, as we have seen so many times before, an attempt to kiss the channel good bye is quite common once it is broken.

 I always take note of strange or out of the ordinary trade, especially when such a long standing historical correlation is broken, something is usually afoot and these small signs are worth noting as they become a piece of the puzzle. Here are commodities via the Dow Jones UBS Commodity Index ETN vs the Euro (in white). Typically commodities and for that matter, the market, are well correlated to the Euro, you can see that correlation earlier in the week, Thursday commodities failed to rally with the Euro and Friday they rallied without the Euro, today they look to be back on track.

This is the same index vs. the $USD, commodities generally have an inverse relationship with the $USD as you can see earlier in the week. Thursday commodities tracked the dollar most of the day until late afternoon, they rallied on a dip in the dollar as they should. Friday they rallied with the $USD which is way out of character. This morning we have a slight uptick in the $USD and commodities are down as they should be, however they look like they are overreacting to the correlation as the uptick this morning in the $USD has not been that big. I suspect they are probably trying to revert to the historical relationship.