Thursday, October 02, 2014

If Goldman Sachs says so, it must then be false: Agriculture price "cuts"

Goldman Sachs has a long history of advising it's clients in investment strategy while doing the complete opposite. Please recall when Blankfein was dragged in-front of a Congressional Committee and asked to explain why this was the case after the sub-prime implosion, he quipped that it was a First Ammendment issue and was therefore were not obligated too. Well, Goldman Sachs has just cut it's outlook on agriculture products (report) like soy, cotton, and corn which I guess means that now is the time to be making some long bets.

Regular readers will notice that I lately have been uber-bearish on agricultural products. They've been absolutely "shmammered" lately on bumper harvests and a rising dollar. What I find peculiar about this notice of price cuts by Goldman is the timing - I was warning about a falling price about two months ago and have been drawing large descending channels ever since. So why didn't this notice not come out two months ago? Well the cynical answer is that it wasn't advantageous for Goldman to issue it when the price was actually falling, and so now that it has fallen and I've begun to point out some strong supports they issue a "sell." I am advising the opposite of the opposite. Based on Goldman's long list of abuses (beautifully documented by I am going to issue a long-term "buy" based simply on the fact Goldman is advising a sell so late in the game.

Please be advised these are all "speculative long buys" because the moving averages are not yet positioned appropriately.

Agriculture Index: DBA
The weekly chart is not looking strong, I will admit this, but the daily chart is. My StochRSI(14) indicator has just emerged from the oversold region with both the KST and Coppock curve pointing up.

Coffee: JO
Coffee is looking great on both the daily and weekly charts. On the weekly charts the EMA(17) is still above the EMA(45) and this latest descent downwards resulted in a bounce off of the EMA(45). Yesterday on the daily charts there was a suprising jump above a long term resistance line with the EMA(13) crossing over the EMA(34).

Corn: CORN
Corn has been taken to the woodshed but I finally think a reversal may be beginning. The reason I say this is the daily chart is showing a long term resistance line that I have been speculating about for some time. This approach represent a great long term opportunity.

Livestock: COW
This has been one of the bright points in my commodity review. Right now on the dailies it is bullishly positioned with the EMA(13) above the EMA(45) with a crossover of the MA(144) in progress. COW is one of the strongest of the bunch.

Soy Bean: SOYB
This on the other hand is the weakest. I think it may still be a little early to making long term purchases so let's wait a week or two.

Sugar: SGG
I had such high hopes for sugar at the beginning of the year but now after a year of oscillation and punishment, SGG finally looks like it wants to go somewhere. This past weekend in my commentary I noticed a rather strong bounce was made off of $40.00. Let's wait till the EMA(13) and EMA(34) come closer together before committing, but the bounce on the 22nd deserves a close examination.

Wheat: WEAT
I've had a proposed bottom in at around $10.75 for a week now. The EMA's on the daily chart are finally beginning to revert and a convincing move on the StochRSI(14) indicator has been made. Again, a week or two might be needed to confirm but all the ingredients for a long-term reversal are here.

Jakob Richardson © 2014