From the Desk of Ian Culley @IanCulley
The Bloomberg commodity index $BCOM is breaking down, approaching fresh 52-week lows.
Somehow Gold and Copper didn’t get the memo. They must be too busy printing new highs.
But when we review other major commodity indexes (including our own equal-weight index of 33 individual contracts), they look poised to roll over.
Check out the triple pane chart of the Bloomberg, CRB, and our equal-weight commodity indexes:
It’s interesting to note the differences between these indexes. The weighting structures vary, as do their support levels. But the CRB index and our equal-weight commodity index challenge their 2022 lows while the BCOM has undercut its respective lows.
Will the other indexes follow BCOM lower, completing major tops? Or will the Bloomberg index reverse higher, holding above former support?
I don’t know. No one does. But that’s not the key takeaway from this chart. Instead, this chart tells me I have no business owning commodities at the index level. Nothing more.
Remember, the commodity market is a market of commodities, just as the stock market is a market of stocks.
But we can’t allow these topping formations to overshadow pockets of strength within the commodity space.
Gold, Platinum, and Copper are challenging fresh 6-month highs on a closing basis. And the copper mining bellwether, Freeport McMoRan $FCX, is up 6% today as it breaks to its highest level since last June.
Looks bullish to me.
I’ll continue to monitor numerous commodity indexes for valuable information. But the insight comes with reviewing as many individual contracts as possible.
That’s where the magic lies…
Stay tuned!
COT Heatmap Highlights
- Commercial hedgers continue to unwind their long position in gold, dropping more than 8,000 contracts this week.
- Commercials' long exposure to crude oil hit three-year extremes.
- And commercial hedgers hold an aggressively long lumber position.
Click here to download the All Star Charts COT Heatmap.
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