Have Commodities Entered A New Bull Market Phase?
Chris Kimble | Feb 26, 2014 07:48AM ET
So far, 2014 has been the "year of the dog!" What do I mean by this? Year-to-date, the best performing assets were the "Dogs of the past 3-years." I shared this theme a few weeks ago, which reflected the Dogs and what assets are doing well this year.
As you might know already, the majority of the Dogs of the past 3-years are commodities, with many doing well this year. Most would agree that commodities in general have been in a bear market over the past few years. So does the rally mean the bear market is over?
If you believe in the 'ole idea of buying low and selling higher (as I do), the commodity sector was a good place to go hunting at the start of this year. The chart above is a 10-year snapshot of the CRB index, which reflects a large rising channel with a few key highs and lows along this channel.
Has the rally over the first two months of the year proven that the CRB index is no longer in a bear market? Humbly, I have to admin I'm not sure.
What I do see? I see an index that has done nothing more than trade in a sideways channel over the past two years and right now it's in the middle of this channel, up against a channel line that twice has been key support (lows in 2010 and 2012) that now is a resistance point, with momentum moving higher.
Readers do own certain commodities at this time, so from a "hope or bias" standpoint, I hope certain commodities head higher. From a pattern perspective, it appears to me the index is in the middle of this sideways channel, up against a key channel line that right now presents itself as resistance.
As I've said, some readers are long some commodities at this time. However, the rally and this pattern are suggesting that we all should have tight stops at this time.
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