Bubble, bubble? The large selloff in commodities Tuesday gave back the gains since around September. In my view, much of this reflects those that are way late to the party and who bought in amid the front page articles of late.
Technical analysis, as I look at it, expresses the behavioral economics observations about investors in real time. These charts reflect much of those recent flows into commodities taking losses or getting out at break even. Technical analysis would see the next wave of recent buyers selling off at their entry point of buyers around September (hence support in technical analysis jargon) or for those holding on they would be sellers at the recent highs (resistance).
(Click charts to enlarge)
|Agriculture ETF (DBA)|
|Silver ETF (SLV)|
Interestingly and not totally surprising given the behavior on the upside and the retail flows into this area, the emerging market ETF chart looks quite similar:
|Emerging Market ETF (WWO)|