Friday, May 30, 2014

Daily Commodities Report: New Additions

Agriculture Fund: DBA
Apparently someone yesterday put a buy for 1 million eMini contracts on the market in one second, basically a billion dollars worth and this is what is responsible for elevating commodities (superbly reported on Zero Hedge, as usual). You can see the bounce on DBA which has helped its recent slide. It seems we have had a breakout and just in the nick of time too! As you can see we almost had two successive closes below our resistance line at about $27.60. DBA has also begun to close the gap when it opened on the 27th, so let's see if that can get closed on the open today. If it does, it should be a transition to a new channel with resistance at $28.40. Without yesterday's "event" I'm pretty sure I would have made a "sell" or "short" recommendation, but the bounce we've seen is similar to the one that appeared in JO (coffee) so I think we are in a "weak buy."

Aluminium: JJU
Some of you may become frustrated with the lack of data on an hourly basis for JJU, but unfortunately that's just the way it is. Let's do our best to make sense of it.

JJU also had a decline similar to DBA (agriculture) but preceded it by a few trading sessions because an upward channel formed after bouncing off the resistance put in on 24th of March. Daily chart will be reviewed this weekend to ascertain where this might be headed.

Commodities Fund: DBC
Probably the most important new addition to Danja Zown. Since the bottom put in on April 2nd (or thereabouts) and May 12th a resistance line had formed which was broken recently. I think DBC is moving in a bullish declining channel.

I don't know what to make it movement since May1st however. All I can say is that MACD, TRIX and PPO are moving upwards. Due to the liquidty of this security we can expect the channels to be much wider which is what I think we are seeing here. I think contact with the upper limits of the channel will be made at around $26.50. PPO is indicating bullishness with the 100 day EMA being greater than the 150 EMA. Short term PPO however is bearish (20 day EMA is less than the 50 EMA). I think the last few trading sessions represent a bottom in this small upward trend.

Cotton: BAL
BAL has also been in a declining channel since early May. Yesterday a push was made through several bands within the channel, however momentum indicated that the movement was not that big a deal. Several taps have been made on the second inner solid line plus BAL has spent most of the time in the upper half of the channel. I think the low put in just after the 27th was a great "buy." Let's look for contact with the solid lines at $53.19 to $53.50. A breakout may follow. Let's review the daily and weekly charts this weekend and make a more informed decision, but I think BAL is looking fantastic at this point.

Platinum: PPLT
PPLT also suffers from not having enough data, but unlike JJU we have fully formed bars. I think PPLT broke out around 13th of May by continuing its inclined channel. Troubling though is that near-term there was a breakdown. This should continue until to around $140.43, but if it fails to hold like SGG (sugar) did when it prematurely broke out we might see a slide to $136.50. Precious metals generally are not in a happy place right now so I'm inclined to the latter scenario.

Soy Beans: SOYB
SOYB has had an incline similar to PPAL (palladium) - long gradual incline without too many anomalous points outside a reasonably sized channel. My PPO long term indicator is uber-bullish with the short term PPO moving up (along with TRIX and MACD), albeit without a cross of the short term over the long term signals. Since we are on the bottom of the channel a weak "buy" might not be a bad idea. Long term charts will be reviewed this weekend to get a firmer idea of its trend.

Wheat: WEAT
Suspcious similarity here to URA (uranium) and LIT (lithium). Narrow declining channels, unusually so in-fact, arriving at a potential resistance and transition. RSI(5) indicates an iminient move up, and although MACD and TRIX could be a little more confidence inducing, I'm pretty sure we'll see a bounce off of $14.80 to $14.90. I'm issuing a "strong buy." Currently at $15.16 momentum hasn't crested yet to see the transition I'm imagining so further decline in very-near-term is likely.