Today, let's take a look at the downward trend channel that seems to have developed in broad commodities (DBC) over the past few years.
As you can see in the chart above, following the post crisis rebound in commodities, the asset class topped out in early 2011 and can't seem to break out of the trend channel drawn above. As we began the new year, commodities as a whole, less a few stragglers, began to rally, but then February brought declines basically across the board (seen in the chart above and the table below). In fact, the only reason DBC seems to be closer to the resistance level in the chart above rather than support (strictly considering the observed performance of major commodities) is that DBE remains fairly flat for the year through February and energy carries over half of the weight of DBC. However, this doesn't seem to be very representative as the other commodity sub-sectors are down quite a bit for the year, especially precious metals (which is 80% gold & 20% silver). Don has even discussed this significant breakdown in the price of gold - the Fear Index - in recent weeks (which you can read by clicking here).
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