Years ago I traded the palladium futures for a client who was using them as a hedge against this physical inventories. The market back then was anemic as I was literally trading against one trader in the pit it seemed each time I called down to get a market (this before the globex system evolved for metals). On the chart, around the 1100 level, was the area I was unloading palladium futures for the client. Now 10 years later, the futures look like now they are gearing up for another move towards those highs. The breakout occurred last month in this metal and has continued into November. Interestingly, the platinum contract, not shown here, it not showing the same breakout pattern. In fact, it is lagging badly. Since these metals are mined together, the breakout in palladium contract might find some stiff resistance ahead. In the past when platinum has lagged the move higher, that has spelled trouble for palladium. It has also signaled taht the move in gold might be long in the tooth (the breakdown below 1400 today could be an indication of this). Nothing solid has occurred yet but I will be watching closely in the days ahead.
In looking at the trend models below, you can see that momentum A model is not yet overbought. The contract corrected on the first break through the bands but bounced off the 13 month MA (strong move) and is now moving higher. A climb towards the 900 level should break the band. If it climbs towards the previous highs, it will be overbought again arguing for a move downward. In the meantime though, the bulls control the ball. in terms of momentum B, it is quite extended but showing know signs yet of moderation.
Going forward, I will be looking for pullbacks to get into this contract. Call be bullish on palladium.
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