Commodities Weekly Report

Commodities have been mired in a bear market since 2011 and continued to lose ground in 2013.  But bear markets don’t last forever and commodities will eventually enter into another bull market.  Many have given up on the commodity secular bull market that began around the year 2000.  They have been seduced especially by recent stock market gains in 2013 and given up on commodities since they have sustained losses for multiple years.  This is natural human behavior to chase winners and give up on losers.

The commodity sector is something to monitor though in 2014 since it will be a 3-year old bear market for many commodities.  Bear markets typically don’t last for longer than 2 or 3 years.  The continuous commodity index also looks to still be in a structural bull market even though commodities have pulled back for a few years.

The following table below shows the Stage Analysis for different commodities and gives a depiction of the current state of the market.  Note that Natural Gas and Nuclear are the two markets that are moving strongly higher in the commodities space.  Grains and Coffee are the weakest markets as they have been in a bear downtrend for a long time.  Copper is looking interesting as it just transitioned into a Stage 1 base.  Gasoline just transitioned into a Stage 2 uptrend.  The chart of oil is also not far from moving into a possible new uptrend with some more gains.

The base copper has formed in 2013 is very tight and is the type of base that could power copper back into an uptrend.  This would bode well for the commodities sector and might pave the way for other commodities to end their bear markets.

Stage Analysis

Ticker Stage Weeks
JJC 1 1
KOL 1 12
UGA 2 1
CHOC 2 21
FCG 2 24
NLR 2 34
PALL 3 3
SGG 4 5
OIL 4 6
REMX 4 9
SOYB 4 12
SLV 4 14
PPLT 4 15
GLD 4 48
CORN 4 49
WEAT 4 52
GCC 4 56
JO 4 118
Stage 1 11.1%
Stage 2 22.2%
Stage 3 5.6%
Stage 4 61.1%

Stage Transitions

JJC transitioned from Stage 4 to Stage 1

UGA transitioned from Stage 1 to Stage 2




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