We’ve seen some interesting trends in the commodities space over the last few weeks.  As shown in the snapshot from our Trend Analyzer tool below, the precious metals group has been surging higher and now sits in extreme overbought territory, while the energy and agriculture groups sit in extreme oversold territory.

Both gold (GLD) and silver (SLV) are up 5%+ over the last week, and they’re now 7%+ above their 50-day moving averages.  This has left them more than two standard deviations above their 50-day moving averages.  Even though our trend algorithm now shows them as being in 6-month uptrends, the fact that they’re so extended to the upside gives them a “poor” timing rating.  An investor looking to get long the space would be better served waiting for some downside mean reversion.

On the flip-side, base metals (DBB), agriculture (DBA), and energy (DBE) are down 4%+ over the last week and more than two standard deviations below their 50-day moving averages.  While they’re noted as being in either sideways trends or downtrends, the fact that they’re so oversold gives them a “good” timing rating.  An investor that has recently seen their actual allocation slip below their target allocation to these areas could add exposure here given how oversold they are.

Below is a six-month chart of the silver ETF (SLV) from our Security Analysis page.  Yesterday was a very impressive breakout with a big gap higher.

The long-term chart of SLV going back to 2016 looks much different, however.  The recent move higher barely puts a dent in the declines seen from mid-2016 to late 2018.  But one thing the recent move higher has done is break the multi-year downtrend that was in place.  The recent series of higher highs and higher lows is a promising sign for SLV bulls.

The most oversold commodity ETF right now is Base Metals (DBB).  It’s literally falling off the chart.

Longer-term going back to 2015, DBB is still well above lows seen in early 2016, but it continues to make lower lows on a regular basis.  The drop seen over the last week marked another significant breakdown.  Start a two-week free trial to Bespoke Premium to access Bespoke’s most actionable research reports.

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