Adding to my commodity short. Palladium has broken out, albeit weakly, to the downside and come back to test the level. A strong run up last year seems to have been speculatively driven — the physical market is in surplus and has been for years. With other commodities, notably copper, now falling, and risk aversion rising, there is reason to expect that expectations of physical demand and investment demand will fall. I would have liked a stronger breakout, both here and for equities, but I am taking my cue from other markets — and therefore taking a risk.

Charts show breakout level and approx. stop position. The stop is within the last price spike — otherwise the trade wasn’t worth the candle. This adds to the risk, however.

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