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So far 2014 has been the “year of the dog!” What do I mean by this? Year to date, the best performing assets were the “Dogs of the past 3-years!” I highlighted these assets to Premium and sector members the first of the year and shared this theme on the blog a few weeks ago, which reflected the Dogs and what assets are hot the first 60 days of 2014. (see here)
As you might know already, the majority of the Dogs of the past 3-years are commodities, with many doing well this year. Most would agree that commodities in general have been in a bear market over the past few years. Does the rally mean the bear market is over?
If you believe in the ole idea of buying low and selling higher (as I do), the commodity sector was a good place to go hunting at the start of this year. The chart above is a 10-year snap shot of the CRB index, which reflect a large rising channel with a few key high and lows along this channel.
Has the rally over the first two months of the year proven that the CRB index is no longer in a bear market? Humbly, I’m not sure. What I do see? I see an index that has done nothing more than trade in a sideways channel over the past two years and right now its in the middle of this channel, up against a channel line that twice has been key support (lows in 2010 &2012) that now is a resistance point, with momentum moving higher.
Members do own certain commodities at this time, so from a “hope or bias” standpoint, I & members hope certain commodities head higher. From a pattern perspective as I shared earlier, it appears to me the index is in the middle of this sideways channel, up against a key channel line that right now presents itself as resistance.
As I shared, Members are long some commodities at this time, the rally and this pattern is suggesting we have tight stops now.