Wednesday, October 22, 2014

Shits n'Giggles: UNG, WEAT, CORN, PPLT and EDZ

A lot has happened in the last two weeks so I'll try my best and show you what I think is good during these most uncertain times.

Giggles: Natural Gas (UNG)
We've all been waiting for a long time but UNG has finally found support on the the bottom-most support line of the larger red declining channel. Winter is approaching and preliminary reports suggest the possibility of another polar vortex in the Western hemisphere. This forecast has been made on Siberian snowfall which so far this winter has been heavy. The EMA's have diverged for the final (I hope) part of the descent so let's wait until they converge a little before diving in. I'd also like to see a strong break out of its current smaller descending red channel first. UNG is very over-sold at the moment on just about every chart you can find so the next month or so will be exciting!

Giggles: Wheat (WEAT) and Corn (CORN)
I've been talking about the agricultural's for about four weeks now and I still like them from a long point-of-view. I think the sell-off leading into our current record harvest was a little overdone which is why we've seen a good move upwards since the beginning of October. Coincidentally, the EMA(13) just crossed the EMA(34) on CORN today and imminently on WEAT. Furthermore, WEAT just broke out two days ago from it's larger declining red channel that was started back in May. Both are currently trading below the MA(144) which makes them speculative trades, but if you're interested in the long view this deserves some close attention.

Shits: PPLT, SLV, KOL, USO, SOY, SGG, GLD, PALL, DBC, LIT and just about every other commodity
I've noticed a bottoming pattern in a lot of commodity stocks (PPLT, PALL, SLV, KOL, SGG, DBC, LIT, GLD) and for this next prognostication I have decided to illustrate it using PPLT. I need to be very clear that this 'bottoming pattern' is transient. It is not the basis of another protracted ascent upwards. The bottoming pattern I am referring to is characterized first by a narrow decline that breaks down in a steep descent. Eventually a trading day is put in with a very wide berth and a long tail whereafter prices stabilize and perhaps even rebound (please refer to SPY for an example of the latter). I do not subscribe to the notion that the 'correction' is over and I am deeply worried by macroeconomic conditions globally that would lead me to believe that the bounce we are currently seeing in this bottoming pattern is simply preparation for another fall. This fall/steeper-fall/bounce pattern is being seen in many of the above commodities. My advice is to tread very carefully for the next few weeks.

Giggles: Emerging Economies Short (EDZ)
I mentioned in this section back in September that I liked the look of EDZ. Emerging economies are having a tough time and recently they broke out of the first triangle in their "three fan" configuration. The EMA's are above the MA(144) which is bullish and are right now sitting at the EMA(13). Given the sell-off we recently had I think EDZ will remain in it's current second triangle and perhaps go as low as the MA(144) before breaking out again into the third triangle. EDZ should be watched closely as the reprieve the market is experiencing I think will only be temporary.

Jakob Richardson © 2014