Agricultural commodities outperforming After a +20% gain in the first quarter of the year, AMEX:DBA formed a 30-week base respecting the 2022 highs
Price resolver higher confirming the continuation of the uptrend making 52-week highs
This week has been very bad for the equity indexes, but AMEX:DBA is making 3 month highs relative to the SP:SPX
The best thing to do in this kind of market environment is to look for what is outperforming
DBA
Preparing for Winter: Accumulating Natural Gas and DBC ETFs in ATitle: Preparing for Winter: Accumulating Natural Gas and DBC ETFs in Anticipation of Rising Prices
Comment: As colder months approach, I'm positioning myself strategically by accumulating Natural Gas, expecting a significant price surge driven by tight supply and potential demand spikes. Additionally, I'm reinforcing my portfolio with the DBC ETF, which covers commodities within the same sector. With rising energy needs on the horizon, this could be the perfect storm for a strong rally in energy markets.
Just look for what is outperforming the S&P 500The market started to rotate in early July to more conservative sectors and AMEX:DBA is showing that agricultural commodities have been outperforming stocks.
The ratio SP:SPX / AMEX:DBA made a lower high starting August and then just days later broke a key support level.
Then the AMEX:DBA broke above a downward trendline.
Is this the start of new trend? At least it is in the short term.
The are some stocks in the food industry that are looking good like NYSE:TSN and $INGR.
Even NYSE:PPT is doing all time highs after a 20-year base!
Wheat Holding at the PCZ of a Bullish Bat Aligning with SupportWheat 2 years after topping out at the PCZ of a Bearish Shark that initiated a downtrend in 2022, has now come back to the top side of the range wheat traded in between the years of 2016 and 2020 before ultimately confirming the bottom at the PCZ of a Bullish Deep Gartley in 2019 and breaking free to the upside of the trading range in late 2020.
Now that wheat has found its way back down here at this previous resistance zone, we can see that it has formed a Bullish Bat structure on the way down which aligns with the old resistance and that it is currently attempting to be supported by the 200-period moving average on the 2-week timeframe. We can likely assume that as the Baltic Dry Index continues higher, wheat will regain it's 2021 highs along with many other agricultural goods and that this will have an inflationary effect overall.
In the related ideas section I will leave a setup for BDRY which is the ETF that tracks the Baltic Dry Index and I will also leave the DBA which is an ETF that holds the futures contracts for various different agricultural goods such as corn, wheat, sugar, and more related items. I will also leave setups for two Dry Bulk and Containership Charterers.
Lastly I will provide my harmonic Inflation Rate projections.
Looming Threats to Food and Energy SecurityThe global food and energy markets face growing uncertainty and volatility in the coming years due to converging factors that could lead to supply shortages, price spikes, and potential shocks.
One concern is the impact of declining sunspot cycles on the climate. Scientists predict that a grand solar minimum could occur in the coming decades, causing global cooling and disruptive weather patterns, negatively affecting grain production in key agricultural. With grain supplies tightened, any further demand increases would send prices a lot higher.
Global grain consumption has grown steadily, increasing by over 2% in the last 25 years. Rising disposable incomes in developing countries have enabled consumers to add more protein foods like meat and dairy to their diets. However, this dietary shift puts pressure on grains, since over 8 pounds of grain is needed to produce just 1 pound of beef. Hence, increased meat consumption indirectly leads to higher demand for grains.
The ongoing war in Ukraine has severely impacted global grain markets, compounding the risks. Combined, Russia and Ukraine account for nearly 25-30% of worldwide wheat exports. With both countries blocking or threatening to destroy grain shipments, the conflict poses a huge threat to food security especially in import-dependent regions like North Africa and the Middle East. Export restrictions like India's recent rice export ban to protect domestic food security are also tightening global grains trade. As supplies dwindle, agricultural commodities become more vulnerable to price shocks.
These supply uncertainties make soft commodities like cocoa, coffee, and sugar especially at risk of price spikes in coming years. Prolonged droughts related to climate cycles like La Niña and El Niño could severely reduce yields of these crops grown in tropical regions of Southeast Asia, Africa, and South America. For instance, a drought in West Africa's prime cocoa-growing areas could significantly impact production. Cocoa prices are already trading near 6-year highs in anticipation of shortages. If drought hits key coffee-growing regions of Vietnam and Brazil, substantial price increases could follow.
Similar severe drought potential exists in the U.S. Midwest this summer. Lack of rainfall and moisture could cause severe yield reductions in America's corn and soybean belts. Since the U.S. is the world's largest corn and soybean exporter, this would cause severe upward price pressures globally. The rise in agricultural commodities ETF Invesco DBA likely reflects investor concerns about impending supply shortages across farming sectors, and its price might be leading the spot price of agricultural commodities.
Fertilizer prices also contribute to food market uncertainty. In 2021-2022 fertilizer prices skyrocketed due to energy costs rising, directly raising the cost of food production. When fertilizer prices surge, it puts immense pressure on farmers' costs to grow crops and indirectly influences food prices. However, falling fertilizer prices do not necessarily translate into lower food costs for consumers. Fertilizer prices have dropped substantially over the last year, without that meaning everything is fine with fertilizer production. Dropping fertilizer prices could actually indicate a slowdown in agriculture, as, lower demand for fertilizers could mean fewer farmers are investing in maximizing crop yields. In that case, food production may decline leading to higher prices due to supply and demand fundamentals. At the same time, if other farm expenses like machinery, seeds, or labor rise due to factors like high energy costs, overall production costs could still increase even as fertilizer prices decline.
The energy markets face a similar mix of uncertainty and volatility ahead. Despite substantial declines in prices, the energy sector ETF XLE has held up well, suggesting investors anticipate a rebound in oil and natural gas. Fundamentally, both commodities could trade a lot higher in the long term, however in the medium term I believe that oil is poised to drop further to the $55-60 area before tightening supplies lead to much higher prices. Essentially what’s missing is a capitulation to flush bullish sentiment, and then lead to much higher prices. At the moment the market has found a balance between a weakening global economy and OPEC+ supply cuts.
A key uncertainty is China's massive oil stockpiling in recent years, now totaling nearly 1 billion barrels. If oil exceeds $80-85 per barrel, China could temper price rallies by releasing some of these reserves, as it did in 2021. With China's economy in turmoil, further reserve releases may be needed to stimulate growth, but it’s unclear whether its economy will be able to come back easily. Weak demand from China is already an issue for the oil market, and releases from the Chinese SPR could restrain oil prices over the next year. However, on the bullish side, the world remains heavily dependent on fossil fuels lacking viable large-scale alternatives, even as ESG trends continue. OPEC's dwindling spare production capacity raises risks of undersupply. Even an economic recession may only briefly dampen oil prices before supply cuts by major producers again tighten markets.
Ultimately, sustained high energy prices will restrain broader economic growth by reducing demand across sectors. The outlook for food and energy markets remains uncertain, with significant risks of continued volatility over the next few years. Multiple converging factors point to potential supply shortages and price spikes across agricultural commodities and fossil fuels. While prices may fluctuate in the short-term (6-12 months), the medium-term trajectory appears to be toward tighter supplies and higher costs for food and energy (2-5 years). To close on a more positive note, I believe that food and energy prices will see significant deflation as extreme technological progress pushes prices down in the long term (5+ years).
DBA Coiling to Break Out ?DBA noted to be on the verge of a break out.
Very quickly, here is why:
1. Weekly Candlestick pattern appears more bullish . Subtle buy signal there.
2. MACD rising and just about crossing up and the VolDiv already crossed over.
3. TD Seq is actually still in Bullish trend
4. Daily Candlesticks show a potential rebound, but it needs to break above the TDST (green line)
5. The Daily background MACD histogram is actually bullish and rising
Still early IMHO
Looking for a pop above the line...
Watch Agriculture... DBANoted in my screener that the Invesco DB Agriculture Fund DBA was outstanding for the week.
A 2.3% climb for the week came after a quick 15% decline early in the year, and entrapment in a consolidation range (yellow box) between 19.50 and 20.80. The lower end of the range represents a strong support having been tested thrice this year. Meanwhile, the weekly MACD was frustratingly flatlining as the VolDiv dropped.
Conditions appear to preliminarily change as this solid marubozu bounce from the support came with a more significant MACD breakout and closed the week at the 23W EMA. There also appears to be an early alignment with the VolDiv uptick in recent weeks.
A shorter term trend line appears to have been broken out as well (green trend line).
An early potential where a follow through rally on the DBA should bring price to about 21, and another imminent breakout of the consolidation zone.
Merry Christmas!!!
#DBA Agriculture ETF breaking below rising wedgeDeutsche Bank Agri ETF has broken down from this rising wedge and now firmly stuck between the anchored vwaps from the recent swing highs and lows which are acting as both resistance and support. This wedge pattern is generally a continuation pattern in the direction of the preceding trend so i would expect this to work its way down to the anchored vwap support and recent lows at +- 19.50
Lean Hogs Act as a Flight to Safety?
Lean Hogs
Technicals (August): It was a risk-off day in nearly every commodity yesterday, with the exception of lean hogs. Lean hog futures were able to rally up near the 50-day moving average which we’ve listed as first resistance. That finished yesterday’s session at 106.90. Just above that is trendline resistance from the March 31st high, that comes in near 107.50. If the Bulls can find enough follow-through today to chew through that resistance pocket, we could see an extension towards 110.
Resistance: 106.90-107.50****, 110.075-110.225***, 111.30***
Pivot: 103.00-103.95
Support: 101.30-101.60**, 98.00-98.65****
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
Agriculture ETF DBA long term perspective... Decided to start looking at the Agriculture ETF, DBA.
Had been viewing it for years now since 2009, but it was in a long downtrend that never seemed to end, until it did in mid 2020.
With a fierce initial upside, and a stall in the previous months, it appears that there might be some retracement to about 18-20 levels, before a real launch.
Much is said about imminent food shortages, etc. over the past months, but the charts are not showing it... IF the chatter is before its time, and the reality comes much later, then the chart is showing that 2023 will hold the next leg up, and expected to be larger; which also means the problem is not going away, and efforts now to alleviate would only be temporal.
$DBA Textbook BRB so farDBA Agriculture fund weekly chart possible bullish textbook BRB - Breakout Retest Bounce - implying a move higher in the next few weeks.
Large open interest in JAN calls, I added to my 19c position today after seeing buyers present Monday and also a nice wick last week despite a lot of equities down big.
JAN19c - 17K OI
JAN20c - 12K OI
$DBA Long Swing Trade Idea $DBA Agriculture fund looks bullish on weekly (macd cross) and monthly time frame.
Looking at the monthly chart we can see a break above $20.75 zone implies a move through the VP gap to $23.8 zone resistance.
MACD showing good momo and EMA's bullish cross implies continuation to the upside.
Open Interest is very heavy on the call side, and on 11/17 a whale bought 10,300 contacts of the 1/21 19c ... Given the technicals and chart I followed this trade idea.
Trade is working +14% so far and I think there's more room . Whale is still in the trade as well.
Agriculture - SeasonalityBrief for Agriculture:
- Price inflation of commodities and tailwinds of seasonality will provide a bountiful harvest this year's end for agricultural commodities.
Focus points:
Coffee:
Oats:
Soybean:
Soymeal:
Cotton:
Most interested in Coffee and Oats, as they are showing strong trends entering into the bullish season, but eagerly awaiting Soybean and Soymeal reversals for a most opportune entry.
GLHF
- DPT
Invesco DB Agriculture fund - Breaking out of Descending channelThis break out of the descending channel looks legit and probably see's higher prices. Looks like a basic basket of agricultural goods is going to become even more expensive. Pattern target -> $20.50
Fund Holdings subject to change
FUTURES % OF NET ASSETS
Corn 14.29
Soybeans 13.73
Coffee 13.60
Sugar 13.25
Wheat 11.31
Live Cattle 9.78
Lean Hogs 9.64
Cocoa 8.48
Feeder Cattle 3.30
Cotton 2.63
COLLATERAL % OF NET ASSETS
Invesco Government & Agency Portfolio 45.95
United States Treasury Bill 42.57
Invesco Treasury Collateral ETF 10.19
Cash/Receivables/Payables 0.01
POTENTIAL TRADE SET UP FOR ETHUSD PLAN
- Open a short position at 1314-1328 and set a stop loss at 1407.
- Set Take profit price at:
1. 1256.60
2. 1127
3. 1052
- High risk but higher reward, 1:4
INFO
- "DOUBLE TOP" or M formation and "HEAD AND SHOULDERS" in play within a symmetrical triangle. Breaking down can bring us to 1050 or 956.
- HIGH VOLATILITY EXPECTED WITH VOLUME TO PUSH PRICE BACK INTO THE BIG BULLISH RECTANGLE CHANNEL.
- GRAYSCALE HAS OPENED THEIR ETHEREUM INVESTMENT BACK, cryptopotato.com
- They might be waiting for the price to dump so they can buy the dip.
SIGNING OFF,
THECRYPTONIZER
ELON MUSK'S PUMP TRADE SET UPPLAN
- Open a long position at 36000 with a stop loss at 33000
- TP positions:
1. 40000
2. 42000
3. 45500
- If the price does not reach our entry price then wait for a pullback from 40000 to 38000 to long again. (Will be updated later)
INFO
- Once price reaches to TP 1 change your stop loss to entry or Take Profit there.
- Do the same for all the TP Positions, increase your stop loss to the previous TP.
- High risk but higher reward, 1:3.5
SIGNING OFF,
THECRYPTONIZER
FALLING WEDGE IN ETHUSDPLAN
- Price Breaking below the Lower Trendline can lead to :
1. 1050
2. 933
- Price pumping up can retest the Upper Trendline but before that it should be able to break the 1246 region.
INFO
- Try to connect the ideas and get a clearer picture of the whole set up.
- This can play either way so keep an eye on the support and resistance as well.
Signing off,
THECRYPTONIZER
Positional Trade set up for ETHUSD PLAN
- Set a short position in ETHUSD at 1246-1256.
- Stop loss at 1310
- Tp 1 at 1050.50 and TP 2 at 956.60
INFO
- Has a strong resistance at 1246 and the price is high likely to get rejected there.
- Stop loss should be in play.
- Check out the chart for your profits and Risk / Reward Ratio
Signing off,
THECRYPTONIZER