Commodities May Be Starting Another Supercycle

[TradeSmith Daily]( Commodities May Be Starting Another Supercycle Commodities have been on fire to start 2022. That’s no surprise, considering inflation has surged higher at a 7% annual pace, the sharpest increase in nearly 40 years. But just look at how much worse inflation is at the wholesale level in terms of higher input costs for businesses. This data is captured in the monthly Producer Price Index (PPI) report, as opposed to the more widely followed Consumer Price Index (CPI). Just last month, the PPI soared 9.7% year over year, the highest on record. Businesses are paying a lot more for raw materials than they were just a year ago, and producer prices may continue to move higher from here because raw commodity prices are going through the roof. Many types of raw commodity prices — everything from aluminum (up 50% YoY) to zinc (up 31% YoY) are at or near multiyear highs. And there is no sign of commodity prices backing off anytime soon. RECOMMENDED LINK [Are You Ready for the 2022 Stock Market Crash?]( If you have any money in the markets right now, [you need to hear this crazy, but true story…]( When the stock market crashed in March 2020, most people just watched it in panic. But not Keith Kaplan. He sold most of his stocks right before the crash… and got back in near the bottom. This story is so crazy that Keith recently agreed to give an interview to tell the details. If you’re worried about the risk of another big market crash in 2022… [I urge you to click here and watch it… before it’s too late](. In fact, commodities just staged a bullish momentum reversal to the upside, as you can see below. SentimenTrader As recently as December, the Bloomberg Commodity Spot Index (BCOMSP) had fewer than 40% of component commodity prices trading above their 50-day moving average. But since then, commodity prices have staged a bullish reversal, surging higher in unison. And today more than 80% of commodities are trading above their 50-day moving average. In the past, this kind of bullish momentum reversal has been a very good sign for commodities going forward, according to analysts at [SentimenTrader.com](. This type of momentum reversal has been triggered 57 other times in the past 51 years, and returns for commodities going forward were consistently positive. On average, during the 13 months following such a momentum reversal, the Bloomberg Commodity Spot Index was up 75% of the time, according to SentimenTrader, and posted median gains of 11.1%. In fact, the commodity index has gained 50% in value over the last two years alone. And historically, big moves like this in a short time period have come at the very beginning, or in the midst, of major, long-term commodity bull markets. This includes the huge secular bull market gains during the 1970s and again in the 2000s. And in those cases we’re talking huge, multiyear gains in commodities. From 1970 to 1980, the Reuters/Jefferies CRB Index, a broad basket of commodities prices, soared 235% in value, as seen in the above chart. And from 1999 to 2008 a similar index was up more than 500%! RECOMMENDED LINK [The Forever Battery: Making Gas Guzzlers Obsolete]( Only 2% of cars sold in the U.S. today are electric vehicles… but that’s about to change — FAST. A new battery breakthrough is ready to hit the market. It could revolutionize the $2 trillion automotive industry… and could soon make gas guzzlers obsolete. This technology is predicted to cause a 1,500% surge in electric vehicle sales over the next four years. The company pioneering this new battery could be the investment of a lifetime. [Click here for details]( Commodity-producing stocks have been a huge beneficiary of the uptrends for inflation and commodity prices. Energy stocks are already up 12.7% in 2022, even while the S&P 500 Index is down 4.8%. Agricultural stocks as measured by the First Trust Indxx Global Agriculture ETF (FTAG) are up more than 3% so far this year. And metals stocks as measured by the SPDR S&P Metals & Mining ETF (XME) have jumped 1.4% in January. Commodities prices are rising across the board at the fastest pace in many years. Commodity-producing stocks are following suit. And with stock and bond markets turning more volatile, you may want to consider diversifying your portfolio by adding commodity-related investments. Enjoy your Thursday, [Keith Kaplan]Keith Kaplan CEO, TradeSmith P.S. If you do decide to add some commodity-related investments to your portfolio, our stock-discovery app can help you streamline the process. In just a few clicks, you can screen for healthy, low-risk stocks based on your personal investing criteria. This tool has found an average of one triple-digit opportunity every trading day since 2018, and it could be the key to unlocking your full investing potential. [Click here to see how it works](. P.P.S. You’re invited to join our Product Education Specialist, Marina Stroud, for her free Intermediate Bootcamp training session. In today’s webinar, we’ll review Timing by TradeSmith. Together we will explore the charts and various Timing indicators. This lesson only applies to Timing by TradeSmith and/or Platinum members. You can, of course, join if you would like to learn more about Timing by TradeSmith. [Click here to register]( for today's webinar. Our webinars begin every Tuesday and Thursday at 1 p.m. Eastern and include time at the end for a question-and-answer session. Best of TradeSmith The chart below represents the best-performing open positions over the last two years, as recommended by our software. [Download now on the Apple Store]( [Get It On Google Play]( [866.385.2076](tel:+866-385-2076) | support@tradesmith.com ©TradeSmith, LLC. All Rights Reserved. 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