Looking back at the lost decade for commodities....
Remember, these are technical comments only. Just as you must be aware of fundamental data for the stocks we recommend based on technical criteria in the report, so too must you be aware of important data regarding delivery, market moving government releases, and other factors that may influence commodity pricing. We try to limit our technical comments to the most actively traded contracts in advance of delivery, but some contracts trade actively right up to delivery while others taper off well in advance. Be sure you check your dates before trading these contracts. For questions regarding this section or additional coverage of commodities email james.west@dorseywright.com.
Data represented in the table below is through 12/10/2019:
Broad Market Commodities Report
Portfolio View - Commodity Indices
| Symbol | Name | Price | PnF Trend | RS Signal | RS Col. | 200 Day MA | Weekly Mom |
|---|---|---|---|---|---|---|---|
| CL/ | Crude Oil Continuous | 59.31 | Negative | Buy | O | 57.56 | +7W |
| DBLCIX | Deutsche Bank Liquid Commodities Index | 323.73 | Negative | Sell | O | 321.82 | -3W |
| DWACOMMOD | DWA Continuous Commodity Index | 489.58 | Positive | Sell | X | 466.45 | -3W |
| GC/ | Gold Continuous | 1469.00 | Positive | Buy | X | 1408.68 | -14W |
| HG/ | Copper Continuous | 2.76 | Negative | Buy | O | 2.71 | +2W |
| ZG/ | Corn (Electronic Day Session) Continuous | 363.25 | Negative | Buy | O | 384.62 | -5W |
The decade known as the 2010s is almost behind us as we are about to close the books on 2019 within the next few weeks. In looking back at the "twenty-tens," it's fair to say that it was a ten-year period dominated by strength in equities and general weakness in alternatives. In other words, it was a lost decade for most alternatives, particularly commodities. Over the past ten years (at least through 12/10/19), commodities, as represented by the Continuous Commodity Index UV/Y, have fallen -16.21%. Meanwhile, Crude Oil Continuous CL/ has fallen -25.88%! To put this in perspective, the S&P 500 SPX has gained 181.23%. During this time, the US Dollar DX/Y gained 25.28%, contributing to the tough environment for commodities in general. However, it wasn't always like this for commodities. The 2010s were a 180-degree turn for the commodities asset class compared to its run in the 2000s, during which time commodities were the number one ranked asset in the DALI asset class ranking 33% of the time. So far in the 2010s, commodities has only been in first place 3% of the time while domestic equities has led 89% of the time (through 9/30/19). In addition, one can see in the graphic below, the weakness in commodities has been present throughout much of the decade as the commodities fund group has been scoring below 3 for most of the time since 2011. This isn't to say that the next decade, or the 2020s, will see a resurgence in commodities, but rather, if we do see commodities start to lead, it would be prudent to adapt and go with the trends, as they can be quite persistent.
