There's been more talk recently about the commodities 'bubble' bursting. This chart (DBC - commodity ETF) would suggest there might be a leak in the bubble but the rounded top doesn't suggest that any bursting is going on. This is a chart of DBC and it's components can be seen below.
Year-to-date, DBC has done well bouncing off of its 50 day moving average, which may present a good entry point - needless to say it's back down near it's 50 day MA. If you use moving average as an entry point make sure to place a stop under said MA. If this level is breached (your reason for entering the trade) then you should exit the trade immediately.
Keep in mind that this is primarily a commentary on the chart - there are a lot of fundamentals that need to be considered. A large portion of DBC is made up of gold and oil so if your outlook on these is bleak, steer clear. Personally, I don't like the outlook on gold and nobody can predict oil. 'Expert' estimates still range between $80-$140 / barrel. Bottom line, if you choose to play DBC wait to see if it bounces off the MA, not before.
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| DBC - TOP 10 HOLDINGS ( 107.81% OF TOTAL ASSETS) |
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| Company | Symbol | % Assets | | Corn (Fut) | N/A | 13.23 | | Crude Oil (Fut) | N/A | 35.03 | | Gold 100 (Fut) | N/A | 10.33 | | Heating Oil (Fut) | N/A | 20.51 | | Lme Alum (Fut) | N/A | 13.4 | | Lme Alum (Fut) | N/A | 0.35 | | Wheat (Fut) | N/A | 14.96 |
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In terms of the broad market, keep this on the radar.
Current Put/Call Ratio:
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