Commodity Market News
Commodity markets, as we are aware, are more a function of demand and supply. Unlike
equities and debt, the prices of commodities are directly impacted by the buy side
and the sell side. If you take any of the key commodities like bullion, energy,
industrial metals or even agri products; the key trigger for their prices is the
forces of demand and supply. But price alone can be deceptive. What really matters
is whether the price trend is sustainable or ephemeral. How do you judge that? One
of the ways to judge the sustainability of the price movement or price trend is
through the advance/decline ratio.
What exactly do we understand by Advance/Decline ratio of commodities…?
There are different ways to look at advance/declines when it comes to commodities.
The first approach is a static approach wherein you look at different sub-categories
of a particular commodity and measure how many of them advanced and how many of
them declined on a periodic basis. This is a static analysis and gives you a quick
idea of how commodities within a category are performing. For example, the overall
Advance/decline ratio for bullion can be understood as an aggregate of the A/D for
gold, silver, platinum, palladium etc. Similarly, the A/D ratio for industrial metals
can be understood as an aggregate of specific metals like copper, zinc, nickel,
manganese etc. The A/D ratio for energy will be a mix of crude oil and natural gas.
The other way of approaching A/D ratio is on a dynamic basis. For each of the sub-categories
of commodities, you can calculate the A/D ratio over a period of time and plot on
a time graph. This data is useful in understanding the trends in A/D. The price
trend typically gets more pronounced when it is viewed in tandem with the A/D trend
as the A/D trend provides an affirmation of the price trend or highlights if the
trend is weak and unsustainable.
A/D in Commodity Market news…
On the LKP Commodity page, the A/D ratio is a useful data point to understand the
underlying trend of the commodity price. The big advantage of the LKP Commodity
Market News page is that these A/D trend is juxtaposed with the news and other commodity
market analytics like the high/low ratio, value toppers, volume toppers, technical
charts, gainers and losers. When combined, they give a holistic picture of the trends
in specific commodities and specific commodity categories.
LKP Securities conducts commodity trading through its associate company, Alpha Commodities
Private Limited. LKP focuses on a strong commodity research infrastructure and commodity
analytics to provide that added value thrust to commodity trading.