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.
With only a few trading hours left in the year, I’m ready to turn the page. I’m sure plenty of you can relate.
In the spirit of looking ahead to a bright and beautiful 2023, I want to share seven of my favorite commodity charts for January.
No grand thesis, just seven potential setups that have my attention heading into the new year.
1. Sugar
Sugar futures print a potential failed breakout after coiling within a tight range since the summer of 2021: The lack of upside follow-through accompanied by a bearish momentum divergence warrants caution.
Though these contracts rarely find themselves on the front page, their upside resolutions provide an important commodity-trading roadmap heading into 2023.
Plus, their relative strength reveals insight into the underlying nature of the current market environment.
Check out commodity subgroup performances anchored from Sept. 26, when the US Dollar Index $DXY peaked:
We all learn how to fall – the sooner, the better.
As adults, we forget this is one of the first skills we learn early in life. For better or worse, my one-year-old reminds me daily.
He’s amazing.
Yes, I’m one of those proud, doting fathers. But his coordination and acrobatics keep both of us out of the pediatric ER (and me, the doghouse). He pops right up whenever he hits the ground and keeps chasing his older brother.
Pure gold.
Since my mind is always lost in the charts, his agility and doggedness remind me of gold’s resilience during the past two years.
You often hear us refer to markets correcting through price or time. It’s an important concept that can reveal underlying strength.
The dual-pane chart of copper and gold futures presents both:
It's the weekly commodity edition of What the FICC?
Not only are commodities losing their leaders, but the leaders are losing their former 2018 highs. As bearish as this sounds, commodities still deserve the benefit of the doubt.