Base Metals ETF Survives Onslaught and Makes a Turn

The DB Base Metals ETF (DBB) is reversing its downswing after becoming oversold within an uptrend. This analysis will cover the long-term trend using the chart and Trend Composite, the oversold conditions using the Momentum Composite and the short-term breakout over the last few days.

DBB fell some 18% from late April to early May, but managed to hold its uptrend as the Trend Composite (first indicator window) remained positive and the ETF held just above the November-December lows (green shading). Don't forget that the ETF hit a new 52-week high less than two months ago and has yet to forge a lower low. Thus, the long-term trend is up and the trading bias is still bullish.

The steepness of the blue trendline extending down from late April reflects the sharpness of the April-May decline. Almost straight down. The Momentum Composite turned oversold with a move below -3 on April 25th and pretty much stayed oversold until May 12th (bottom window). This is a clear case of becoming oversold and staying oversold as the short-term downtrend extended.

Turning back to the price chart, DBB broke above the steep trendline and exceeded the 11-May high with a surge the last four days. This short-term breakout reverses the downswing and argues for a move higher. This short-term breakout is in the direction of the long-term trend, which is up. A close below 21.5 would argue for a re-evaluation.

The focus at TrendInvestorPro remains on select commodity-related ETFs as we covered short-term setups in the Copper ETF (CPER), Gold SPDR (GLD), Palladium ETF (PALL) and Platinum ETF (PLTM) ETFs last week Tuesday and Wednesday (video). These will be updated in tomorrow's report. Click here for immediate access.

In this week's Next Level Charting video (here), I reviewed the Trend Composite strategy that trades the 50 ETFs in the All Weather ChartList. We look at the good signals, the bad signals, the drawdowns and the recent signal in the Consumer Staples SPDR (XLP).

The Trend Composite, Momentum Composite, ATR Trailing Stop and eight other indicators are part of the TIP Indicator Edge Plugin for StockCharts ACP. Click here to take your analysis process to the next level.

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