My money is on a big commodities rebound – here’s why

Commodities traders are too busy looking at the headlines, says John C Burford. Smart traders are looking at the charts.

The commodity sector is in the doldrums. Surely, everyone now accepts that as a given with all of the negative coverage it has received recently. We've become used to seeing almost daily headlines proclaiming record low prices in commodities from iron ore to crude oil, to base metals and UK milk. And these stories are now frequently appearing in the media.

As you know, I generally follow the rule that when a particular story moves from the specialist research departments to appearing regularly in the media, that story is about finished. That is the basis I am working on with commodities.

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(Contracts of 25,000 pounds)Row 0 - Cell 1 Row 0 - Cell 2 Row 0 - Cell 3 Open interest: 195,724
Commitments
60,28294,03731,18088,65348,097180,116173,31415,60822,410
Changes from 08/04/15 (Change in open interest: 13,943)
-3341,0839,6713,1231,18812,46011,9411,4832,002
Percent of open in terest for each category of traders
30.848.015.945.324.692.088.68.011.4
Number of traders in each category (Total traders: 302)
77140775445178235Row 8 - Cell 7 Row 8 - Cell 8

John is is a British-born lapsed PhD physicist, who previously worked for Nasa on the Mars exploration team. He is a former commodity trading advisor with the US Commodities Futures Trading Commission, and worked in a boutique futures house in California in the 1980s.

 

He was a partner in one of the first futures newsletter advisory services, based in Washington DC, specialising in pork bellies and currencies. John is primarily a chart-reading trader, having cut his trading teeth in the days before PCs.

 

As well as his work in the financial world, he has launched, run and sold several 'real' businesses producing 'real' products.