Can the Continuous Commodity Index give insight into 2013?

Market Pulse: December 27

The December 2012 CCI opened the month at 572.64 and as of Dec. 27 is trading at 560.29.

Looking at the monthly chart below, you see how this index has climbed and dropped over the past 10 years. The index is made up of 17 markets, all weighted equally. Look at the following table to see how the index has opened the year over the last decade. 

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

191.27

234.64

255.67

284.38

348.94

396.52

476.86

363.06

489.17

629.36

564.36

The index hit an all-time high in 2011 at 691.09. You can see the gradual climb until 2008. All this time the monthly ADX showed a strong trend and monthly Stochastics were overbought.

In 2008 there were numerous reasons for the highs in commodities. One major reason is the U.S. Dollar Index hitting a low of 71 in 2008. Also, through 2000 we saw more money enter the futures industry then at any time before. Swap Dealers and exchange-traded funds (ETFs) have added unheard of volume and dollars to commodities. Even the CCI has an ETF (GCC) that actually holds long-only futures contracts in all 17 commodities. It is currently managing $482.3 million in assets and was created in January 2008. And this is by far not the biggest. Another ETF, DBA, created in January 2007 has $1.69 billion in assets also spread across numerous long-only commodity futures contracts. We have seen many more commodity ETFs created. Just these two ETFs control more than $2 billion in commodity futures contracts that must roll over. The exchanges love these investment vehicles because they bring volume — massive volume. And I am not even talking about Swap Dealers here.

One thing on the chart to look at is the weak monthly trend we currently see with ADX at 18.6. So watch the index — not to trade, but to gauge the overall direction of commodities. FYI, GCC had a 52-week high at $32.36 and a 52-week low at $26.53.

Proceed to Page 2 for the latest COT Data...

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