Bloomberg News

Commodity Index Rebound May Be Almost Over: Technical Analysis

December 09, 2011

Dec. 8 (Bloomberg) -- The rebound from a 10-month low for the Standard & Poor’s GSCI Total Return measure of 24 commodities may extend another 3 percent before stalling, according to technical analysis by Commerzbank AG.

The index has gained 14 percent since falling to as low as 4,346.6 on Oct. 4, rising above its 100-day moving average last week. The attached chart shows the rally may be capped at the Nov. 17 high of about 5,112, or the 200-day moving average at about 5,130, according to Commerzbank.

“We look for this duo of resistance to cap the rally as we view this as formidable resistance,” Karen Jones, a Commerzbank technical analyst in London, wrote in a report yesterday. “While rallies are capped by the 200-day moving average, the overall risk remains on the downside.”

The gauge is up 0.4 percent this year at 4,961.3, as European leaders work to contain the region’s debt crisis and amid concern that slowing growth will curb demand for commodities. That would be the weakest performance since 2008, when raw materials slumped amid the worst recession since World War II. The commodity index still outperformed global equities, which are down 8 percent this year.

In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index.

--Editors: Nicholas Larkin, Claudia Carpenter

To contact the reporter on this story: Agnieszka Troszkiewicz in London at atroszkiewic@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net


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