Problematic for DBC, rival funds and commodities bulls in general is weakness on the charts of the CRB Index, West Texas Intermediate and gasoline futures combined with a decent chart for the U.S. dollar. Commodities are dollar-denominated and thus have an inverse relationship to the greenback. WTI crude and RBOB gasoline futures combine for over 28% of DBC’s weight.
The ETF’s 14.1% weight to Brent crude is a plus at a time when Brent/WTI spreads are widening due to supply disruptions in OPEC states Libya and Nigeria. However, that may not be enough to stem the slide for commodities if the PowerShares DB US Dollar Index Bullish (NYSEArca: UUP) breaks resistance at $21.80.
“At the same time some of the key macro commodities are breaking down, the U.S. Dollar is bouncing off support and breaking above a bullish falling wedge,” said Kimble.
PowerShares DB Commodity Index Tracking Fund
