These commodities are sorted into 4 groups:
- Petroleum based products (based on their importance to global trade, always make up 33% of the weightings)
- Liquid assets
- Highly liquid assets
- Diverse commodities.
Chart 1: CRB's daily chart as at April 4, 2017 (Source: Stockcharts.com)
The breakdown of CRB coincides with the breakdown of the uptrend line for WTIC on May 2. Yesterday, WTIC dropped 5% and broke thru the low of USD47 recorded in March to USD45.52!! Where's happening!
Chart 2: WTIC's daily chart as at April 4, 2017 (Source: Stockcharts.com)
Between Dow Jones trading near its all-time high and WTIC & CRB index breakdown, somewhere somethings are not going right! Of course, China!! We can see from the chart below, SSEC has broken below its uptrend line.
Chart 3: SSEC's daily chart as at April 4, 2017 (Source: Stockcharts.com)
The weakness in commodities and Chinese stocks could come to our shore. We should be careful in our investing approach and must avoid over-trading in the near term.