Commodities Look Awful But A Few ETFs May Have Bottomed OutJanuary 26, 2015
By Markets in
2014 was a rough year for commodities (and not just for oil). The CRB continuous commodity index was down 12% over the course of the year and was down over 24% from the high put in place in late April.
Since ETFs (or ETNs) are a simple way that many investors gain exposure to the commodity markets, we keep track of 91 commodity related ETFs and almost all of of the 91 ETFs have technical charts that are in a free fall such as these:
However, for the contrarian investors that don’t mind being early on a trade, we present three commodity related ETFs that look as if they have perhaps bottomed out relative to world equities (all of the point and figure charts are based on relative performance against the MSCI All Country World Index using our standard 2.5% box and three-box reversal rules).
The iPath Bloomberg Cocoa Subindex has basically performed in line with the MSCI ACWI since 2012. The current support level needs to hold.
The iPath Bloomberg Coffee Subindex is at a crossroad. It has performed well since 2013 but has more recently given back most of its relative gains. If support holds here than this ETF may be able regain its bullish configuration in 2015.
Lastly, the iPath Bloomberg Nickel Subindex looks like it may be the furthest along in its bottoming pattern. This ETF has clearly broken the down trend line it was in prior to 2014. It is currently testing support and if support should hold again, it would be a very bullish sign.