Investing Insights

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COMMODITIES WATCH  •  June 27, 2022  •  Jon Wolfenbarger

Is The Commodities Bull Market Over? See What This Key Indicator Is Telling Us Now

FRANKFURT, GERMANY — Commodities have pulled back sharply in recent weeks, prompting many investors to question if the commodities bull market is over.

Given the attractive valuations of commodities we discussed in our newest webinar “BULL AND BEAR PROFITS STEP 1: ESTIMATING LONG-TERM RETURNS”, we believe the long-term (10 years or so) secular commodities bull market remains intact. However, we do believe a recession is coming soon, as we discussed recently here, which could lead to a shorter-term cyclical bear market in commodities.

Some Commodities Are Bullish, Some Are Bearish

Commodities overall remain in a bull market uptrend. As shown below, despite the recent pullback, the Invesco Commodity Strategy No K-1 ETF (ticker: PDBC) remains in an uptrend on all times frames with the 20-day moving average (20-dma) still above the 60-dma and the 60-dma still above the 250-dma. The second clip shows commodities are still strongly outperforming the S&P 500, despite underperforming recently. The third clip shows near term price momentum is negative, based on the PPO. The fourth clip shows commodities were overbought, based on the RSI, which typically leads to a pullback, which has happened.


The ProShares K-1 Free Crude Oil Strategy ETF (ticker: OILK) has similar bullish characteristics to PDBC, as shown below.


Agricultural commodities have been weaker than oil lately, but remain in a bull market uptrend for now. The ELEMENTS Rogers Agriculture ETN (ticker: RJA), shown below, still remains in a long-term uptrend, with the price and 60-dma above the 250-dma. However, RJA is in a short-term downtrend with the 20-dma below the 60-dma. The second clip shows RJA is still outperforming stocks, but the relative price trend line recently broke below its upwardly sloping trend line. The third clip shows RJA is in a negative price trend, but the fourth clip shows the RJA is oversold, which signals at least a short-term rally is likely to come soon.


Copper is now in a bear market downtrend, as shown below of the US Copper Fund (ticker: CPER). The 20-dma is below the 60-dma and the 60-dma is below the 250-dma. The second clip shows copper now underperforming the weak S&P 500, as it has broken below its trend line and 250-dma relative to the S&P 500. The third clip shows it has negative near-term price momentum and the fourth clip shows it is oversold.


Gold, by contrast, remains in the wide trading range it has been in for the past two years, as shown below, of the Aberdeen Swiss Gold Shares ETF (ticker: SGOL). There is a potential bearish “double top” formation, which is concerning. But gold has been outperforming the weak stock market this year. Gold has slightly negative momentum and is neither overbought or oversold.


The Key Economic Indicator To Watch

We have seen that the overall commodities ETF (PDBC) is highly correlated with the oil ETF (OILK). Is there an economic indicator that oil is highly correlated with? Yes, inflation expectations, as shown below (oil is the black line and inflation expectations is the red line).

Oil and Inflation Expectations

This makes inflation expectations the key economic indicator to watch for the end of the cyclical commodities bull market. Inflation expectations have pulled back modestly in recent months, but remain historically high, as shown below (University of Michigan Inflation Expectations is the blue line and the 10-Year Breakeven Inflation Rate is the red line). So this key indicator is telling us the commodities bull market is not over yet.

Inflation Expectations

The University of Michigan consumer survey of inflation expectations for the coming year ticked down from 5.4% in March and April to 5.3% in May and June, which is well below the latest CPI report of 8.6%. According to the University of Michigan survey:

“Inflation continued to be of paramount concern to consumers; 47% of consumers blamed inflation for eroding their living standards, just one point shy of the all-time high last reached during the Great Recession. Since the preliminary reading, the Federal Reserve raised interest rates by 75 basis points, exceeding the 50 basis point hike that had been previously telegraphed. The final June reading of the median expected year-ahead inflation rate was 5.3%, little changed from mid-month or the preceding four months. In contrast, long run expectations receded from its mid-month reading of 3.3% and settled at 3.1%, back within the 2.9-3.1% range seen in the past 10 months. Consumers also expressed the highest level of uncertainty over long-run inflation since 1991, continuing a sharp increase that began in 2021.”

The 10-Year Breakeven Inflation Rate has pulled back from a high of 3.02% in April to 2.56% now. This measure, based on market interest rates, implies what bond investors expect inflation to be in the next 10 years, on average.

Unless this really is like the 1970s, the coming recession will likely cause both inflation expectations and commodity prices to fall at some point.

For example, the Great Recession started in December 2007 and ended in June 2009. Oil prices rose from $89 in early December 2007 to a high of $147 in July 2008 and then collapsed to a low of $33 in February 2009. Something similar could happen in this recession.

Implications For Investors

Oil and most other commodities could fall significantly in the coming recession, but for now inflation expectations remain high and commodities generally remain the best performing asset class, as we predicted last year, strongly outperforming stocks, bonds, REITs and cryptocurrencies this year.

Oil is currently the strongest performing commodity, followed by agriculture, which has weakened more than oil recently. Copper is in a clear downtrend, which is consistent with our expectations for a recession, since copper is very sensitive to the business cycle. Gold remains in a trading range, but has a potential bearish “double top” pattern in place.

The coming recession warrants caution on all commodities, but it appears too early to make a cyclical bear market call on overall commodities, oil and agriculture since their longer-term bull market uptrends remain intact and inflation expectations remain high…for now.


A new Members-only webinar is available now titled “BULL AND BEAR PROFITS STEP 1: ESTIMATING LONG-TERM RETURNS”. This is the first of four webinars where we discuss in detail our four key steps for profiting in bull and bear markets. This webinar focuses on historical and current valuation levels for the four major asset classes: bonds, commodities, REITs and stocks. We use these valuation indicators to estimate long-term (10-12 years) returns for these asset classes.

Understanding how to estimate long-term returns and knowing what those estimates are, which even most professional investors do not know, is incredibly powerful in helping you build conviction to prepare for and profit from bull and bear trends in all assets. It is available in the “BULL & BEAR WEBINARS” page here:

 Previous Issues  

RECESSION WATCH  •  June 23, 2022  •  Jon Wolfenbarger
Here Comes Another Recession, Thanks To The Fed

BEAR MARKET TECHNICALS  •  June 19, 2022  •  Jon Wolfenbarger
How To Spot Stock Bear Market Selloffs And Rallies

BULL VS BEAR  •  June 9, 2022  •  Jon Wolfenbarger
Three Key Reasons This Is A Bear Market Rally, Not A New Bull Market

INVESTING RISKS  •  June 1, 2022  •  Jon Wolfenbarger
The Biggest Risk Investors Face In Coming Years

RECESSION SIGNS  •  May 23, 2022  •  Jon Wolfenbarger
Central Planning Disaster…The Fed Is Hiking Rates Into A Recession

BULL VS BEAR  •  May 15, 2022  •  Jon Wolfenbarger
3 Reasons Bear Market Rally Could Continue, Despite Recessionary Signs

BEAR MARKET SIGNS  •  May 7, 2022  •  Jon Wolfenbarger
Bear Market Rules Apply…Sell The Rallies Instead Of Buying The Dips

BEAR MARKET SIGNS  •  April 28, 2022  •  Jon Wolfenbarger
This Is Not Your Father’s Stock Bear Market

BONDS AND COMMODITIES  •  April 21, 2022  •  Jon Wolfenbarger
Outlook For Bond And Commodity ETFs In The Coming Recession

SECTOR TRENDS  •  April 12, 2022  •  Jon Wolfenbarger
Stock Sector Performance Is Warning Us About The Market’s Direction

FED WATCH  •  April 8, 2022  •  Jon Wolfenbarger
Can The Fed Predict Anything?

RECESSION WATCH  •  April 4, 2022  •  Jon Wolfenbarger
Recession And Bear Market Countdown Has Started

FED WATCH  •  April 1, 2022  •  Jon Wolfenbarger
The Fed Can’t Control The Economy, But They Do Lower Living Standards

LONG-TERM RETURNS  •  March 27, 2022  •  Jon Wolfenbarger
Will The Stock Market Really Be 50%+ LOWER In 12 Years?

BULL VS BEAR  •  March 20, 2022  •  Jon Wolfenbarger
Strong Stock Rally Last Week, But Evidence Remains Bearish

BEAR MARKET SIGNS  •  March 10, 2022  •  Jon Wolfenbarger
Objective Signs A Stock Bear Market Is Starting -- How To Profit Instead Of Lose

ETF TRENDS  •  March 2, 2022  •  Jon Wolfenbarger
War Is Helping Fuel The Commodity ETF Bull Market

BEAR MARKET SIGNS  •  February 21, 2022  •  Jon Wolfenbarger
Warning: Widespread Shift To Bearishness Across Most Stocks And ETFs

SECTOR TRENDS  •  February 17, 2022  •  Jon Wolfenbarger
Current Best And Worst Stock Sector ETFs

PROFIT FROM INFLATION  •  February 9, 2022  •  Jon Wolfenbarger
How To Profit From Inflation With ETFs

INTEREST RATES AND STOCKS  •  February 1, 2022  •  Jon Wolfenbarger
Proof That Major Stock Bear Markets Can Start Without Rising Interest Rates

BULL VS BEAR  •  January 24, 2022  •  Jon Wolfenbarger
Stock Market Crashing: Bull Market Correction Or Bear Market Beginning?

FED WATCH  •  January 18, 2022  •  Jon Wolfenbarger
What Fed Rate Hikes Can Do To Stocks And ETFs In 2022

STOCK MARKET INDICATORS  •  January 8, 2022  •  Jon Wolfenbarger
Rough Start To The Year Is Not Encouraging For Most Stocks And ETFs

LEADING ECONOMIC INDICATORS  •  December 31, 2021  •  Jon Wolfenbarger
2022 Perfect Storm: Global Slowdown + Fed Tightening?

SECTOR TRENDS  •  December 20, 2021  •  Jon Wolfenbarger
Current Best And Worst Stock Sector ETFs For Long-Term Trend And Short-Term Trade

ASSET TRENDS  •  December 13, 2021  •  Jon Wolfenbarger
Current Best and Worst ETFs For Long-Term Trend and Short-Term Trade

BULL AND BEAR TECHNICALS  •  December 5, 2021  •  Jon Wolfenbarger
Holiday Sales Continue On Stocks and “Risk-On” ETFs

BULL AND BEAR TECHNICALS  •  November 27, 2021  •  Jon Wolfenbarger
“Red Friday” Sale On Stocks And Most ETFs

FED WATCH  •  November 19, 2021  •  Jon Wolfenbarger
The Market Says Interest Rate Hikes Are Coming, Whether The Fed Likes It Or Not

COMMODITIES  •  November 11, 2021  •  Jon Wolfenbarger
Commodities Are The Only Major ETF Asset Class With Attractive Long-Term Returns

BULL VS BEAR  •  November 4, 2021  •  Jon Wolfenbarger
Bull Market Continues, But Stocks Will Likely Be 50%+ Lower In 12 Years!

BEATING THE MARKET  •  October 26, 2021  •  Jon Wolfenbarger
Why Mutual Funds Don’t Work

CRYPTOCURRENCIES  •  October 19, 2021  •  Jon Wolfenbarger
Bull Case For Bitcoin ETFs — And The Best One To Buy Now

BULL AND BEAR TECHNICALS  •  October 11, 2021  •  Jon Wolfenbarger
The Stock Market Is Weakening More Than Most Stock And ETF Investors Realize

BEAR MARKET PROFITS  •  September 30, 2021  •  Jon Wolfenbarger
How To Trade ETFs To Maximize Bear Market Profits

BEAR MARKET PROFITS  •  September 22, 2021  •  Jon Wolfenbarger
How To Identify Bear Markets With ETFs And Basic Technical Analysis

Bear Market Profits  •  September 19, 2021  •  Jon Wolfenbarger
How To Make Money -- Instead Of Lose Money -- In A Stock Bear Market

ETF STRATEGY  •  September 16, 2021  •  Jon Wolfenbarger
Proof That ETF Strategies Using Technical Analysis Significantly Beat “Buy And Hold” Investing

BULL AND BEAR TECHNICALS  •  September 10, 2021  •  Jon Wolfenbarger
Good News And Bad News For Stocks And Stock ETFs On Three Different Time Frames

BEATING THE MARKET  •  September 1, 2021  •  Jon Wolfenbarger
Three Ways To Beat The Market With Stocks And ETFs

BEAR MARKET RISK  •  August 28, 2021  •  Jon Wolfenbarger
Here’s Why The Next Stock Bear Market Will Likely Be The Worst Since The Great Depression

ETF TRENDS  •  August 26, 2021  •  Jon Wolfenbarger
These Popular ETF “Inflation Hedges” Are Now Moving In Opposite Directions

ETF STRATEGY  •  August 24, 2021  •  Jon Wolfenbarger
What Smart ETF Investors Need To Understand About Bitcoin, Gold and Stocks

SECTOR ETFS  •  August 19, 2021  •  Jon Wolfenbarger
Sector ETFs With The Best and Worst Earnings Growth In 2021 and 2022

ECONOMICS 101  •  August 12, 2021  •  Jon Wolfenbarger
Employment Remains At Recessionary Levels, Thanks To Government Subsidies

MONEY MISCHIEF  •  August 9, 2021  •  Jon Wolfenbarger
Wise ETF And Stock Investors Focus On Money Supply, Not Employment

BULL AND BEAR TECHNICALS  •  August 7, 2021  •  Jon Wolfenbarger
Bonds, Gold and Silver ETFs Are All In Bear Markets

MONEY MISCHIEF  •  July 31, 2021  •  Jon Wolfenbarger
Commodity Stocks and ETFs At Risk As Money Supply and Industrial Production Growth Slows

STOCK MARKET TREND  •  July 24, 2021  •  Jon Wolfenbarger
Stock Market Uptrend Remains Intact, But Four Key Indicators Show Cracks Below The Surface

STOCK MARKET SENTIMENT  •  July 20, 2021  •  Jon Wolfenbarger
Stock Market Investor Sentiment Is Flashing Danger Signs

STOCK MARKET WARNING  •  July 14, 2021  •  Jon Wolfenbarger
Investor Warning: US Stock Market Is Most Overvalued In History!

ASSET TRENDS  •  July 9, 2021  •  Jon Wolfenbarger
What Major Asset (and ETF) SURPRISINGLY Has The Most Bearish Trend Right Now?

INFLATION DANGERS  •  June 30, 2021  •  Jon Wolfenbarger
3 Reasons ETF And Stock Investors Must Prepare To Profit From Rising Inflationary Pressures

DEBT DANGERS  •  June 23, 2021  •  Jon Wolfenbarger
The Government Debt Bomb Could Decimate Stock And ETF Investors Who Are Not Prepared

BULL AND BEAR TECHNICALS  •  June 15, 2021  •  Jon Wolfenbarger
What This Proven Indicator Is Telling Us About The Stock Market And Economic Trend

BOOM AND BUST INDICATORS  •  June 8, 2021  •  Jon Wolfenbarger
What Every ETF And Stock Investor Should Know About Business Cycles

BOOM AND BUST INDICATORS  •  June 1, 2021  •  Jon Wolfenbarger
How To Use The Yield Curve To Profit From Booms And Busts

CREATING WEALTH  •  May 25, 2021  •  Jon Wolfenbarger
How To Achieve Financial Freedom By Investing In ETFs And Stocks

FREE MARKET INSIGHTS  •  May 19, 2021  •  Jon Wolfenbarger
How Successful Stock And ETF Investing Benefits Society By Creating Wealth

CRYPTOCURRENCIES  •  May 13, 2021  •  Jon Wolfenbarger
Trader Alert: 5 Bitcoin Bear Market Sell Signals

BULL AND BEAR TECHNICALS  •  May 6, 2021  •  Jon Wolfenbarger
How To Profit More Than Buy And Hold Investing

BULL AND BEAR TECHNICALS  •  April 30, 2021  •  Jon Wolfenbarger
Why Smart Stock Traders Always Use The 250-Day Moving Average