by Greg Harmon
One commodity that not many people trade is random length Lumber ($LB_F). In fact yesterday there were a less than 300 contracts that trade hands in the futures market in total. Contrast that to 24,000 for Copper, 11,000 for Silver and 73,000 for Gold, just in the near month. But it has a story to tell and it is an important one. In October the commodity was on fire, breaking a 4 year ascending triangle higher. This pattern suggested that it could go as high as 500 or 56% higher. It did have a great run up to over 400 but has been pulling back since early March and just last week broke below a significant 4 year rising trend support line. The current week started lower still and it is now below the 100 week Simple
Moving Average (SMA). The commodity is set up now for even more downside. There is support lower at 265 and 230 followed by 197, 163 and 140. The 3-box reversal Point and Figure chart has a price objective at 176. But since nobody is trading it this does not really matter. What is important is that the price of lumber is going down and looks to continue. For an economy built to a significant extent on housing this is good news. Think about what it means for the housing sector and all the add-ons.
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