JJT is down about 2.71% in the year-to-date period. The ETF currently has a Zacks ETF Rank of 2 or ‘Buy’ rating implying that there is significant bullishness facing the ETN in the months ahead (read: 3 Metal ETFs to Buy on the Commodity Upswing).
State of Backwardation: A Positive Factor
Moreover, JJT is currently benefiting from the roll yield. Roll yield is the positive or negative return that occurs when a futures index or ETF rolls from the near month’s contract to the next month’s contract.
The roll yield is positive when the futures market is in backwardation and negative when the futures market is in contango. Basically, if the price of the near month contract is higher than the next month futures contract, then this is backwardation.
Currently, the tin market is in backwardation, which is bullish for the commodity and the tin ETF, JJT. A market in backwardation signifies that demand exceeds supply boosting tin prices higher.
Given that tin prices seem to be on the rise with supply/demand imbalances, JJT could be an interesting pick for investors looking to make a concentrated play on tin in the industrial metals market.
This article is brought to you courtesy of Eric Dutram.