MSCI World ETF (NASDAQ:ACWI) relative to Commodity Index ETF (ARCA:DBC).
The MSCI World Index continues to outperform the broad based Commodities Index, with prices accelerating still higher within an already steepening curve. Warning signals are now appearing on the overbought RSI, however, as the signal begins to flatten within overbought areas. This suggests the rally could be maturing in the coming month.
With the near-term trend also steepening, there could be risk of a ‘bubble’ forming, suggesting the reversal, when it appears, could be swift and deep. With this in mind, investors are advised to practice caution in chasing this equity rally. In fact, those investors who are more risk-averse investors can use equity strength to reduce equity positions, and adopt a more neutral equity/commodity allocation.
