We keep belting out the merits of the CRB Index and how close it is to breaking to a multi-week high. We believe that the CRB will break to a multi-week high over the coming days and then move quickly to the 300 level over the coming weeks. We only have to look at the broad based strength in commodities, the continued weakness in the USD, the strength of shipping rates (as per the Baltic Dry Index) and the reduction in supply (as a consequence of unavailability of credit to increase supply).
The Baltic Dry Index is very close to breaking to a multi-week high. Granted strength in the Baltic Dry Index is not, on its own, bullish for commodities but its behaviour taken together with the behaviour of other commodities it is a very powerful confirming indicator.
We have been watching four ETFs representing the various sectors namely DBE, DBA, DBB, and DBP. Take a look at these ETFs yourself and note how close they are from breaking out! Also note the strength of Natural Gas. The natural gas tracking ETF “UNG” was up again last night and is very close to breaking above resistance at 18. Natural Gas was the last commodity (in the commodities that matter) to break-out of a bear trend……
Also note the strength of Cotton – a very important industrial commodity.
Our preferred instrument to obtain exposure to commodities is the ETF “DBC”
