Commodities And Global Markets
Chris Kimble | Aug 15, 2018 01:30PM ET
Commodities are a hot topic and an important investing theme. With the US dollar coming back to life, commodities have pulled back. And that pullback now finds the “equal-weight” complex in trouble.
Below is a chart of the Thomson Reuters Equal Weight Commodity Index. The green shaded area represents a 20-year rising channel (point 1). Within that channel, however, commodities have formed a multi-year downtrend (point 2 – marked in red).
Using the all-time high and the early 2016 low, we can identify key Fibonacci levels. One level is the 23.6% Fib, which proved to be stiff resistance (point 3), marking a bearish reversal as well.
- Currently, the Commodity Index is attempting to break 20-year channel support (point 4).
- Investors should watch for follow-through selling on the Index (as confirmation).
Commodities just may be sending an important global macro message to investors!
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