DBC trade ideas
Trading the Coming Pop in CommoditiesI don’t think its a coincidence that commodities across the board are looking bullish at exactly the same time as the economy is slowing down and the Fed is quietly conducting QE4. Fed bought twice as many bonds this month than their monthly total during QE3. October rate cut odds are at 90%.
I don’t think inflation is going to explode tomorrow but I do think its coming. When the Fed launches their new QE program that will be larger than the first 3 QE’s combined, inflation will definitely tick up.
DBC is not a long term hold due to decay, but it is a good way to trade commodities. I’m researching individual commodity companies to get maximum leverage during this next bull market.
Go take a look at natural gas, soybeans, corn, copper, platinum, silver. They all look ready to take off. The CRB index also looks ready to take off.
The relative strength index shows that commodities have strong support and are gearing up for a bull trend.
Commodities short term bear long term bullHi all,
Just a quick post to say:
- I have been watching diversified commodity indexes recently as they provide meaningful diversification in any portfolio (generally a small % allocation is recommended) .
- Over the past 9 years (as you can see) this has been in a strong and long-lived bear market. The bottom must be somewhere, below $13 is a good candidate for the bottom - and I will be a buyer at these prices.
- Recently Iron ore, Palladium, Crude have been on a rally - which shows that there are signs of life at least.
- Generally, commodities have been on a steep losing streak - which is even more drastic if inflation if considered - but rest assured that commodities both have value and are undervalued. I see Commodities as a valuable hedge against inflation / devaluation / debt crisis. All of these scenarios are taken increasingly seriously and are more than the ramblings of outsiders. In a crisis,when the banks and markets freeze up, those things with real-life immediate utility value will appreciate.
Discussing financial shocks with a friend from an emerging economy recently, they described how their family stayed afloat by entering (when the writing was on the wall but the chips hadn't yet fallen) a contract for physical delivery of key consumer commodities. These were repackaged and then sold to the local community at the market price of the day. The lines were long and demand outstripped supply. Despite significant currency devaluation, extreme uncertainty, and social upheaval demand for basic necessities remained - as will be the case in all current and future crises.
In a world that is in the grips of a major unfolding debt crisis I want at least a portion of my portfolio in things that you can "hold in your hand." Now, you can't hold an ETF in your hand. I will be buying physical precious metals (bullionstar dot com in Singapore) as no other commodities are really value dense or non-perishable enough for storage outside of specialised facilities. I intend to allocate 5% of my portfolio to this ETF below $13.
Wish me luck
DBC - Commodities Taking a BreatherAs global markets were slammed this past week after the US-China tensions resurfaced, one area of the market that has felt the brunt of recent market volatility has been commodities (DBC as a proxy).
With trade tensions resurfacing between the two economic giants, commodities are currently stuck between a rock and a hard place, and as a result of the recent market weakness, it really shows.
Commodity prices are currently at the lower end of their Bollinger Bands with the bands widening, indicating increased volatility for the asset class. Further, the RSI and MACD have both been trending lower indicating that momentum is falling out of favor with the market. Lastly, commodity prices fell out of their envelope pattern, breaching the lower limit of $16.10 and failing the re-test.
Consequently, it appears that commodities are currently under great macro pressures with no signs of it letting up anytime soon.
We would recommend caution to investors who are currently in this space at the moment.
DBC/Commodities-LONGNarratives: Supply-Demand Shocks (think Climate) / Strong-Increasing Dollar / US Macro,
Commodities at a Crossroads (Pt 2)After a strong rally in early 2019, commodities seem to have taken a breather in recent sessions. Since mid-January 2019, due to increased global macro headwinds, as well as slowing economic activity in Europe and China, commodities (DBC as a proxy) have been treading water against key safe haven assets such as the US Dollar (Part 1) and US treasuries (above).
As can be seen in Part 1, when commodities are measured against the US Dollar, the price ratio (DBC/UUP) failed to move higher in recent sessions, and is struggling to re-test its 20-Day EMA (Green) and 50-Day EMA (Blue). Moreover, in the chart above, a similar pattern emerges when commodities are compared against US Treasuries. The price ratio between commodities and US Treasuries (DBC/IEF) moved higher since early 2019, but failed to break higher above its 50-Day EMA and is also struggling to clear this important hurdle.
It seems that commodities are at a crossroads at the moment, in that the asset class is trying to break its 50-Day EMAs against the US Dollar and US Treasuries respectively. If commodities can break through these levels, expect the asset class to move higher in the short-term. If not, or if global economic indicators do not improve over the next few weeks, expect more downside in the near future.
Commodities at a Crossroads? (Part 1)Commodities vs US Dollar:
As can be seen in in the chart above, when commodities are measured against the US Dollar, the price ratio (DBC/UUP) failed to move higher in recent sessions, and is struggling to re-test its 20-Day EMA (Green) and 50-Day EMA (Blue).
See Commodities at a Crossroads? (Part 2) for our commentary
COMMODITY TRACKER ETF BUY + HOLDIn current market conditions we are expecting higher volatility in equities due to ongoing issues, during times like this diversification is key.
See commodity tracking fund index above for security + growth over coming months
Expecting to see $18 in the near future
I am still dollar cost averaging in equities but adding this index to portfolio is key to balancing gains going forward...
DBC - More Odd Charts - Commodity Drop Underway?Crude oil has been getting absolutely walloped for weeks now, having lost over a third of its value recently. Looking at the chart of USOIL I recently posted, it seems to me we are definitely primed for a bounce. The bounce will ultimately fail, but we’re really, really oversold at this point.
One thing I noticed is that the commodity ETF, symbol DBC, has actually cracked the channel which has been in place for years. Like I said above, I think oil will bounce, but I wouldn’t be surprised to see DBC hit resistance in the form of that now-broken channel.
DBC is the basket of commodities
How 'bout them Apples... Or Corn, Cattle, Cotton, Gold, Coffee. Based on my analysis I see commodities markets offering investors above average returns heading into the next decade. During the expansion of our economy from 2008, prices in the commodity market have been fairly low and producing dismal returns. This is ranging from several factors such as energy prices falling, subsidized farming, the price of precious metals collapsing, and even cyclical trends. Which we will cover later... Investing in commodities can be difficult because it covers a range of different industries not just one. Often time commodities are broken down into two groups: Hard Commodities (Gold, Silver, Rubber, Crude oil, etc.) these types of commodities are often mined or extracted from our beautiful earth. Soft commodities on the other hand are usually grown (Coffee, oranges, corn, wheat, sugar. Soybeans, etc.) Because commodities range from different sources it makes capitalizing on the investment tricky due of the prices fluctuation of goods (i.e. sugar may go up while, oil prices decline.)
However, there is one indicator that can help gauge the movement of all commodities classes and that’s inflation. Inflation effects all good that can be purchase on the market, not just one- therefore leading to a rise in commodities as a whole.
As a consumer, who likes inflation? When the price of goods rise it can severely dampen ones pay check. Unless, you shop at Whole Foods then you are screwed at the register before and after inflation. If you’re an investor in commodities on the other hand, rising inflation can be advantageous as one would expect a higher return as the prices of consumer goods rise. Taking a glance at the chart, we can see over the past decade as inflation began its accent from 2008 the rise in the commodity index has done the same. It is also worth noting, this is NOT a default action, but more often than none- throughout history commodity prices have moved well alongside inflation.
Another factor to consider is the current administration’s stance on trade and protectionism. Bringing back jobs from overseas into the United States will definitely increase the prices of goods because of the higher production cost state side. Again- great for commodity investors and producers, bad for the overall economic well-being.
As I mentioned earlier, price cycles can also play a larger role when looking to invest in commodities. Though it is heavily debated on whether cycles hold any merit in commodities-we have seen the price of commodities rise and fall at precise time intervals. Through my research I've noticed Commodity prices usually move in 10 to 15-year price cycles. The Peaks and troughs of prices have been fairly consistent and are set to gain ground in 2018. However, super cycles in commodities are nearly 50 years long and we are also seeing both short and long term cycles harmonize. Usually in this occurrence we see a sharp uptick in commodity prices that end up lasting for decades. Name one thing that can get up that fast after 50 years…I’ll wait.
While there this is only the tip of the iceberg when it comes to complex markets such as commodities. We believe there is empirical evidence that tells us now is the time for this asset class.
Following the trend downFollowing a pretty clear trend down, I expect to find near term support, retrace and follow through
Breakout on Powershare DB commodity ETFAfter the big buy volume in Feb, they try to shake the bulls off, then slowly creating uptrend. It started to break out this week on ascending triangle (blue lines), and previous price level from Jan. (orange line), and uptrend channel mid0line (green lines) and there’s also a weekly trend line from back in June 2017 (not shown). As of now, MACD is positive, StochRSI up, McClellan Oscillator in uptrend. We could see a potential run to $18+ here.
Break out on Powershares DB Commodity ETFAfter the big buy volume in Feb, they try to shake the bulls off, then slowly creating uptrend. It started to break out this week on ascending triangle (blue lines), and previous price level from Jan. (orange line), and uptrend channel mid0line (green lines) and there’s also a weekly trend line from back in June 2017 (not shown). As of now, MACD is positive, StochRSI up, McClellan Oscillator in uptrend. We could see a potential run to $18+ here.
DBC based on technical analysis of stock selectionDBC based on technical analysis of stock selection, week macd Jincha, but also heavy volume, so to buy on the approach
Exit mode: day ma20 below and bend down
Commodities ready to goThis commodity basket ETF shows a grinding decline followed by a couple of years of basing.
A triangle breakout has occurred with a backtest underway. Good reward:risk trade targeting $20 minimum.
Interesting to see commodity prices picking up in this age of "no inflation" :)
Commodity fund long $DBCThe recent commodities price recovery have given these etfs a push, this etf has just broken a strong resistance level, so it could continue higher
Some pull back is possible, look for buy signal lowerHeikin-Ashi signals some pause. If it retraces to 14,90-15,05 zone, look for a buy signal in line with the bullish trend!
DO NOT short it!
$DBC W,D H&SW: 2017 trend line broken w/ RSI over 50, MAs crossing for up, uptrend confirmed
D: Head and Shoulders in progress
$DBC - Buy signal. Increase commodity exposure!Heikin-Ashi buy signal from support.
Initial stop at 14,50.
$DBC Commodities Mean Reversion for 2016?I will check this chart monthly in 2016, but it's possible we do see some sort of mean reversion towards $16-$18.
