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April 24, 2015

Commodity Market Review

By Marcelo Perez,  Alhambra Investment Partners
The GSCI Commodity Index ((GSG)) consists primarily of Energy, but also includes Agriculture, Industrial Metals, Livestock, and Precious Metals as part of its holdings. The index broke down during the month of July on the backs of a stronger US Dollar and Saudia Arabia’s strategic decision to hold production levels. It now finds itself just over the 50-day moving average after holding support at the 18.80 level. If the US Dollar continues to retrace and the index were to hold that 20.25 level, we could be in for a nice recovery. The index is down 2.55% year-to-date, in addition to being down 35% in 2014.

The US Dollar Index. Has been on a tear since July, but has stalled in March and April and tested the 50-day moving average four different times during that period.

The Dow Jones-AIG Energy Index (JJE) consists of Natural Gas, Crude Oil, Heating Oil, and Unleaded Gas. Since the middle of June the index (weekly) has collapsed, breaking support at the 50 and then 200-week moving averages. And this despite serious geopolitical issues in the Middle East. The index is down 0.39% YTD, after a 44% drop for all of 2014. Things may be looking up though, as the index is holding support at the $9 level.

The DJ-AIG Grains Total Return Index ((JJG)) consists of Corn, Wheat, and Soybeans. Have we reached a bottom in the longer-term? It must stay above the 34 level for that to be so. The index is down 10.08% for all of 2015.
The DJ- AIG Industrial Metals Total Return Index ((JJM)) includes Aluminum, Copper, Nickel, and Zinc. The index has suffered along with most commodity indices, as global demand (especially from China) has been subpar. On the plus side, this index has managed to hold support at the 25 level, but must break out past the 26.50 level for any meaningful move forward. JJM is down 3.03% YTD.

The DJ-AIG Precious Metals Index ((JJP)) includes Gold and Silver. The index also finds itself below the 50-week moving average, but holding support at the 54 level. Despite a strengthening dollar, the precious metals index is impressively holding its own. JJP is up 1.34% YTD.
The DJ-AIG Softs Index ((JJS)) includes Coffee, Cotton, and Sugar. JJS was on an absolute tear in the 1st Quarter 2014, up just under 30%. But since then it was come crashing back, and must get above the 43 level if it wants to restart a positive trend line. The index is down 9.04% YTD.
Courtesy Marcelo Perez, Alhambra Investment Partners (Author Archive Here)
The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters. © EconMatters All Rights Reserved | Facebook | Twitter | Free Email | Kindle
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Item Reviewed: Commodity Market Review Rating: 5 Reviewed By: EconMatters