Technically Speaking
Darin Newsom DTN Senior Analyst

Saturday 02/16/13

Commodities: "39 and Holding"

First, a big “thank you” to all of you out there who have not given up on this blog site. Yes, I’m still alive and still looking at charts. However, as most of you know, most of the markets are making a lot of noise yet not going anywhere. From metals and energies to grains and some livestock contracts, the markets are adrift like a cruise ship in the Gulf of Mexico as we slowly make our way through the tortuous month of February.

Source: DTN ProphetX

As I thought about this post, the Jerry Lee Lewis song used in the title kept coming to mind. The Continuous Commodity Index itself is reportedly about 55 years old, so like many late middle-agers it could certainly be “39 and holding”. It is also made up of 17 different commodities, meaning it is not as heavily weighted towards energies as the more widely used CRB Index.

A look at the weekly chart for the CCI shows the commodity sector in general appears to be going nowhere fast. The index continues to hold above secondary (intermediate-term) support at 550.47, a level that marks the 50% retracement of the previous uptrend from the low of 502.28 (week of May 29, 2012) through the high of 598.65 (week of September 10, 2012). Notice that the latter was itself a test of the 50% retracement level of the previous major (long-term) downtrend that began with the high of 691.09 from the week of April 18, 2011. Minor (short-term) resistance remains between 567.46 and 575.27.

So what do all of these numbers mean? In a nutshell, the commodities that make up the CCI should generally move sideways for the foreseeable future. Corn, the soybean complex, crude oil, gold, cotton, etc. all basically show the same type of pattern of little long-term investor interest. Livestock markets could also start to stabilize after seeing sharp breaks recently. Over the next week I will update analysis of some of the major markets before I hit the road again at the end of the month.

I’ll close this post out with a somewhat fitting line from the song itself: “You can bet he’ll never see 39 again. He should have turned lose long ago, but still he’s a-hangin’ in.”

.ITo track my thoughts on the markets throughout the day, follow me on Twitter:\DarinNewsom

Posted at 11:45AM CST 02/16/13 by Darin Newsom
Comments (2)
The place isn't the same without you, really!
Posted by MIKE KELLEY at 6:07PM CST 02/18/13
Darin, Why are we not seeing higher prices for these poor ending stock numbers? I appreciate all you do buddy and I look forward to all your input in this 2013 season. Thanks again for all your insight...
Posted by Davis Sprague at 6:18PM CST 02/22/13
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