Commodities have established a base after successfully holding multi-year support, according to David Sneddon and his team at Credit Suisse in London.

Sneddon says the BBG Commodity Total Return Index remains in a recovery phase after holding support at 124.20, which is the neckline to the late 1990’s base (see Chart). Moreover, weekly MACD momentum has turned higher (lower pane), which supports the idea that commodities have completed a bottom.

The Index’s close above 138.79/138.84 has opened up an initial target of 144.20/40 and then 148.89/152.36, this latter level offering significant resistance since it comes from the confluence of i) the large price gap from March, ii) the 50% retracement of the Q1 collapse and iii) the falling 200-day moving average. As such, Sneddon thinks 148.89/152.36 will cap the recovery.

See Chart.