In recent weeks, a number of commodities have retreated sharply. This week, however, commodities had appeared to be stabilizing. Today, commodities have started to slide once again and a number of tests of technically significant support levels appear to be under way that could suggest whether consolidation may continue or if another downleg may be about to begin.

In energy, for example, crude oil has declined into its $120/bbl to $122/bbl support zone, while natural gas has been testing $9/mmbtu. Should these levels falter, the next significant support levels do not appear until closer to $110/bbl and $8.25/mmbtu, respectively. Gold, meanwhile, has been testing its 50-day moving average near $916.50 but could decline to test $900/oz or its 200-day average near $885.50 as silver has already broken its 50-day and seems to be trending toward a test of $17/oz or its 200-day average near $16.70. Grains also appear to be soft today as well with corn, wheat, and soybeans all drifting back below $6/bushel, $8/bushel, and $14/bushel, respectively.  

Canadian share update: Takeover news sparks new interest in the diversified mining sector

A big deal in the base metals sector appears to have changed sentiment toward that group today. Teck Cominco (TSX: T.TCK.B, Stock Forum) agreed to acquire the assets of Fording Canadian Coal Trust (TSX: T.FDG.UN, Stock Forum) for approximately $13.9 billion through a combination of cash and shares that values Fording at a 18% premium to its 20-day volume-weighted average price. Teck already owned 19.9% of Fording and was its partner in Elk Valley Coal. Fording gained 8.6% on this announcement while Teck advanced 1.6% on the news, suggesting that investors believe this deal to be favourable to both parties. This news also appears to have increased takeover speculation in the base metal sector with Labrador Iron Ore (TSX: T.LIF.UN, Stock Forum) advancing 5.8%, FNX Mining (TSX: T.FNX, Stock Forum) jumping 3.2%, HudBay (TSX: T.HBM, Stock Forum) rising 2.9%, Equinox (TSX: T.EQN, Stock Forum) climbing 2.7%, and Lundin (TSX: T.LUN, Stock Forum) gaining 2.1%.

FirstService (TSX: T.FSV, Stock Forum) has soared 15.9% today after reporting EPS of 41 cents for last quarter, well above the 27 cents investors had been expecting. On this news, FirstService broke through resistance at the $16 level, potentially opening the door for further advances on trend toward prior resistance near $17.75 or $20.

Rogers Communications (TSX: T.RCI.A, Stock Forum) fell 5.3% this morning following the release of its latest earnings report. Although EPS last quarter of 57 cents beat the 53 cents Street estimate, revenues of $2.80 billion fell short of market expectations. Despite some selling pressure, Rogers appears to have found support near $34.75 and may be in the process of completing a double bottom. Upside resistance appears near the $38 and $40 levels.   

Upcoming educational webinars

In the coming months, Colin Cieszynski will be presenting a series of free webinars on trading for accredited investors from coast to coast. 

Date                Time                Topic                                      

August 12         7:30 pm ET      Developing a Trading Strategy 3: Developing
                                                a Trading Plan (for CMC Markets clients only)

For more information on these and additional CMC Markets seminars, please go to CMC Markets Seminar Registration Page at http://www.cmcmarkets.ca/en/content/education/free_seminars.do

This commentary is based upon technical analysis. Technical analysis is the study of price and volume and the interpretation of trading patterns associated with such studies in an attempt to project future price movements. Technical analysis does not consider any of the fundamentals of an underlying company, and as such is inherently uncertain and should not be the only factor considered by an investor in making an investment decision. 

This commentary is provided for informational and educational purposes only. Nothing contained in this commentary is intended as investment advice or a recommendation or solicitation to buy or sell. All opinions expressed are current as of the date of publication and subject to change without notice.

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