DJP - Time to Harvest?

The first chart for today is for DJP, the iPath Bloomberg Commodity Index ETN. Commodities have been a bright spot for 2026. If you are in commodities, that’s great news. But my review of cycle work suggests that commodities frequently lead towards the end of a bull cycle. Therefore, if commodities are leading, does that imply this bull market is nearing the end? We will look at some economic charts to help us assess that, but for now, let’s just focus on DJP.

At first glance, this chart does not look encouraging to me. Without the aid of any technical analysis tools, trend lines, etc., this looks to me like something that is breaking down. I then noticed what might be considered a Head ‘n Shoulders pattern.

As stated earlier this week, I don’t use a lot of patterns in my work. At the moment, DJP appears to be holding right at the neckline, so perhaps the pattern is negated. Regardless, if you’ve been long commodities, it might be time to harvest some of your gains ... at least some of them. And alternative, of course, would be to put a sell stop below that neckline. If DJP rallied off the neckline, fantastic. If it falls through, you’re out.

Sponsor Message From Author, C. Theodore Hicks II, CFP, CKA, CMT:

Oil

One of the problems with some of the commodity ETF and ETNs is they are heavily influenced by oil. As for DJP, about 15% is related to oil. And, unless you’ve had your head in the sand, you know that the price of oil has sky-rocketed since the war with Iran began. So, if we want to get a sense for whether or not DJP is breaking down, we ought to look at oil as well.

From my standpoint, it looks to me like oil may have stabilized. That little period of consolidation on the righthand side of the chart is still a little wider than most of us would like, but the volatility has definitely contracted.

Dr. Copper Says We’re Healthy

Since we are on commodities, let’s look at the price of copper. You may have heard copper referred to as Dr. Copper because this metal has a PhD in economics. Traditionally, the price of copper falls as we head into a recession. From the looks of this chart, Dr. Copper is not predicting a recession.

So, I guess this good doctor says the economy is healthy.

Business Loans – Expanding

Our fourth chart for the day is from the Federal Reserve Economic Database (FRED). This is commercial and industrial loans; basically, business loans. This is more of a lagging economic indicator, so we don’t want to use it as a recession caller. But, this is still one of the many economic charts that I like to keep my eye on.

The reality is that all of the economic charts that I’ve examined lately all suggest that the economic expansion is more likely to continue.

The problem, of course, is the stock market is a leading economic indicator.

VIX

The final chart for today is for the VIX, the CBOE S&P Volatility Index. VIX had been trending down since the beginning of April. So, just from a mean reversion standpoint, we were kinda “due” for a spike in volatility. We got that spike on Friday when VIX recrossed 20.

While VIX is not signaling an all clear, it is certainly good news that it closed the day in the lower end of Tuesday’s range.

Today, we’ll get the latest on inflation (Consumer Price Index) ... so that could certainly be a cause for some volatility.

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