As commodities tick higher on DALI we look back at the lost decade and past year of performance
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 12/29/2020:
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 | 48.01 | Positive | Buy | O | 36.68 | +7W |
| DBLCIX | Deutsche Bank Liquid Commodities Index | 304.73 | Negative | Sell | O | 264.33 | +7W |
| DWACOMMOD | DWA Continuous Commodity Index | 581.46 | Positive | Buy | O | 486.25 | -203W |
| GC/ | Gold Continuous | 1882.10 | Negative | Buy | O | 1827.66 | +2W |
| HG/ | Copper Continuous | 3.55 | Positive | Buy | X | 2.83 | -1W |
| ZG/ | Corn (Electronic Day Session) Continuous | 466.25 | Positive | Buy | X | 357.71 | +2W |
As discussed towards the end of 2019, the decade of the “2010s” was predominantly dominated by strength in equities and weakness in alternatives – a lost decade for commodities some say. From 12/31/2009 – 12/31/2019, commodities, broadly represented by the Continuous Commodity Index (UV/Y), posted a cumulative return of -13.21% compared to the S&P 500’s (SPX) price return 190%. If including dividends for the S&P 500 (TR.SPXX), this jumps to 257%. The iShares US Core Bond ETF (AGG.TR) gained 43% on a total return basis over the same timeframe. Furthermore, the commodities fund group found on the Asset Class Group Scores (ACGS) page has generally remained below the 3.0 fund score threshold despite numerous attempts to break through, with the latest happening in September of this year (shown below). However, the 2000s were much kinder to the asset class, along with parts of 2020. Although broad, equal-weight commodities exposure has generally lagged this year (especially crude oil), should commodities continue higher and/or establish further leadership it would be prudent to adapt and go with the trends, as they can be quite persistent.
Additional commentary on the recent movements in commodities is also in the DALI section of today’s research report. To reference the “2020 Timeline” published a few weeks ago in the Alternative Assets update, click here.
