An already rocky year for commodities exchange traded funds could get even more tumultuous as the charts for some commodities are weakening.
The $6.1 billion PowerShares DB Commodity Index Tracking Fund (NYSEArca: DBC) is down 7.3% this year, which does not sound compared to the bear market losses for gold, silver and several soft commodities. However, DBC is facing a potentially ominous technical situation of its own. [Commodity ETFs Slump Amid Fed Speculation]
“Many key commodities are breaking support, ranging from the CRB Index, Crude Oil, Commodities ETF (DBC) and Gasoline futures. This has my attention, due to this…the majority of the time Crude Oil & Gasoline have been soft, it may have been good for prices at the pump, yet it wasn’t good for stock prices,” said Chris Kimble of Kimble Charting Solutions.
October, usually a dour month for gold, was untypically kind to the yellow metal despite Thursday’s declines and November is the second-best month of the year for bullion. [Gold ETFs Can’t Wait for November]
However, the DBIQ Optimum Yield Diversified Commodity Index, DBC’s underlying index, devotes less than 8% of its combined weight to gold and silver futures, so even if those commodities rally, the impact on DBC is likely to be slight.