Commodity ETF Alert February 2009 Portfolio Update

| February 24, 2009 | 0 Comments

February 24, 2009

February has been another crazy month in the markets.  The Dow’s lost more than 1,000 points in just over two weeks.  A very scary scenario.

Unfortunately, the commodity market has been following right along with the equity markets.  Our all commodities index the iPath Dow Jones–AIG Commodity Index(DJP), fell almost 13% in the last week.

It was ugly for people who don’t know what they’re doing.

Lucky for us, we’ve got a big winner in our portfolio with IAU!  But more on that in the position updates section below.

Across the board, every commodity complex is down except for Precious Metals.  Once again Gold and Silver are the big winners in the commodity arena.  Precious Metals are up 10% in just two weeks time.

A few days ago, the Journal ran a great article on Commodity ETFs.  The article’s headline is “Oil ETF Aims to Curb Its Impact on Futures”.  If you have access to this article I suggest you give it a good read.

The article discusses the impact commodity ETFs are having on the futures markets. Specifically, the US Oil Fund (USO) on oil prices.  The ETF is being forced to change trading techniques because its size is impacting markets.

It’s one of those risks investors need to be aware of and something we actively monitor.

Let’s take a look at our open positions…

Position Updates

. . . . iPath S&P GSCI Crude Oil Total Return ETN (OIL) Buy up to $20.25.

This was our new trade for February.  Unfortunately the trend was lower overall.  The downdraft in the equities market didn’t help either.  The good news is, everyone has an opportunity to establish positions.  Based on recent price action, some of you probably got in at great prices!  I still expect the oil market to trend higher.  Continue holding, it won’t be long before the OPEC production cuts really push prices up.

. . . . iShares COMEX Gold Trust (IAU) – HOLD

This week gold traded over $1,000 an oz.  IAU hit the price target of $99.Congratulations to everyone on a great trade.  If you haven’t yet exited this trade, now’s the time to pull the trigger.  Gains on the trade were almost 18% – Not bad for just a few weeks work.

Action To Take

 •  Exit IAU for a profit of almost 18%, we hit the price target.

Category: Commodity Trading

About the Author ()

Justin Bennett is the editor of Commodity ETF Alert, an investment advisory focused on profiting from the ebb and flow of important commodities via ETFs. The commodity veteran and options specialist is also a regular contributor to the Dynamic Wealth Report. Every week, Justin shares his thoughts with our readers on a variety of commodity-related topics. Justin is also a frequent contributor to Commodity Trading Research’s free daily e-letter. And he’s the editor of another highly successful and popular investment advisory, the Options Profit Pipeline.