Lumber prices gained national overnight attention a few months ago when they soared to over $1,700 MBF in the futures market. Prices declined quickly from May and the attention disappeared and moved over to chip shortages and climbing gasoline prices.
I have continued to follow lumber futures, so let's see what is going on now.
In this daily bar chart of the nearby continuous lumber future, below, we can see that prices finally hit bottom in August and have been improving. A new uptrend has started with higher lows and higher highs. Prices are above the rising 50-day moving average line and getting closer to a retest of the 200-day line. The On-Balance-Volume (OBV) line has stabilized the past four months. The Moving Average Convergence Divergence (MACD) oscillator is back above the zero-line in buy mode.
In this weekly Japanese candlestick chart of lumber futures, below, we can see an improving technical picture. Prices are firming with a steady OBV line and a rising MACD oscillator. Getting there.
In this daily Point and Figure chart of the nearest lumber future, below, we can see an upside price target in the $1,247 MBF area.
In this weekly Point and Figure chart of lumber futures, below, we can see a potential $1,759 target.
Bottom line strategy: I do not expect you to open a futures account and trade lumber, but you might consider looking at a company like Potlatch Deltic ( PCH) which is in an uptrend. Not all commodity price rallies are "transitory," in my humble opinion.
