See also A “Creative Play” in Natural Gas
Commodity prices overall have taken a significant tumble over the past several years. At the moment a number of commodity markets appear to be at least attempting to “form a bottom.”
I should probably point out up front that there is no “prediction” built into the comments above. I don’t really have a firm opinion as to whether commodity prices are in the process of “bottoming out”, or if another round of “breakdowns” are in the offing. The one thing I do sense is that there is a lot “hanging in the balance” in the near future. To wit, please see Figure 1.
The charts in Figure 1 display:
DBA – which tracks agricultural commodities
DBC – which tracks an index of commodities
DBP – which tracks precious metals
JO – which tracks the price of coffee (also referred to by my wife as the “World’s Most Important Commodity”)
(click to enlarge)
Figure 1 – Which way for Commodities?; tickers DBA, DBC, DBP, JO (Courtesy: ProfitSource by HUBB)
As you can see in Figure 1, all four of these commodity related ETFs have:
A) Declined significantly in recent year
B) Are attempting to form a bottom
As I mentioned I can’t really offer a meaningful opinion here as to “which way next”. The one thing I do know is that traders looking for opportunities should be watching to see if these (and other commodity related assets) “bottom out” or “break down” again. For now we need to sit and wait and see how this plays out.
For those of us who like “action”, we must currently heed the immortal words of that great philosopher Tom Petty, “the waiting is the hardest part.”
Jay Kaeppel
