Playing Commodities Super-Cycle with GSG /2:1 Reward/Risk rationGSG is a nice way to play Commodities Super-Cycle in a diversified style.
at current level the risk to reward is about 1/2, which makes it attractive long position.
Key stats
About iShares GSCI Commodity-Indexed Trust Fund
Expense ratio
0.75%
Home page
Inception date
Jul 10, 2006
GSG is a commodity pool tracking a version of the S&P GSCI, giving it fairly neutral exposure to the broad energy commodities market. Instead of holding contracts in the underlying commodities, GSG only holds long-dated contracts on the GSCI itself, as well as sometimes quite substantial cash and T-Bill assets. The fund has exposure to the same commodities in the same weights. These commodities are weighted by reference to world production statistics. Only contracts sufficient liquidity are eligible. GSG offers great coverage of plain vanilla broad commodities. As a commodity pool, GSG reports any cap gains marked to market on a K-1 at a blended rate.
Classification
What's in the fund
Exposure type
Government
Bonds, Cash & Other100.00%
Government101.25%
Cash−1.25%
GSC - Goldman Sachs Commodity Index - Bullish UpTrend intactGSC - Goldman Sachs Commodity Index - Bullish UpTrend intact.
Broken red long term DownTrend line.
Reverse yellow Head & Shoulders reversal pattern.
New Green UpTrend line being adhered too.
Commodities Breakout from VCPPivot: 24.65
Stop: 24.25
Avg Cost: 24.75
Risk From Pivot: 1.63%
Position: Half Defensive (250 USDs) as stop is super tight and a strong gap down can be multiples of my risk.
VCP Breakout on the Goldman Sachs Commodity Index. Added some exposure to my portfolio with this small trade.
Over all exposu
Commodities Only Go DownVery few traders understand the fundamental reasons why Commodities Only Go Down. I will educate you.
Let's take an example of Corn. Over time, what happens with corn?
- We discover new ways of producing corn
- We create cheaper ways to produce corn
- We find faster ways to produce corn
- We learn
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Risky over the next 6 months, perhaps triggered by fed raising rates in March?
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However, looking at weekly RSI it looks a bit exhausted (using data from bear market in the last 10 years)
Typically w
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Red line, once support, become resistance since 2015.
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Overbought weekly RSI with divergence into an area of resistance.
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Energy held strong while most other commodities have rolled over. E
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Displays a symbol's price movements over previous years to identify recurring trends.