Food Porn: Is it Time to Buy Soft Commodities?

Michele Schneider

Today, the equities market and many commodities rallied. 

Sugar, wheat, corn, soybeans, and cocoa all had significant gains.

A while back, I did a piece for RealVision on sugar futures as a sign of potential inflation.

Click on “sugar futures” to watch.

At the time, sugar rallied to the parameters mentioned, but also failed to hold those gains, thereby stopping us out for a small loss.

However, a first probe is just that-a probe. 

Now, the agricultural commodities ETF (NYSEARCA: DBA) might be awakening along with sugar (NYSEARCA: CANE).

Most of us have taken pictures of our most memorable morsels.

How many of you, though, have thought about the price of the raw materials that went into our food porn picture shown below.

On the left is the weekly chart of DBA, the ETF for Agriculture.

soft commodities dba etf agriculture trading chart investing news april 4

The dotted line is an exponential moving average we like to use. Should DBA close the week out over 16.87, that is a first level breakout.

The 100-year low ratio between equities and commodities has put all commodities on my radar. 

The week of March 15th, DBA posted a V-bottom.

If DBA should continue north, it will eventually clear 17.50 (the 50-Week Moving Average). 

From there, with summer coming, any potential drought can take this ETF way up.

On the right is CANE, the ETF for sugar futures.

Not quite as pretty as the V-bottom in DBA, CANE sits on its 50-WMA. 

A weekly close over 7.37 is this ETFs first level breakout. That same EMA in this chart clears over 7.40. 

Through 8.00, sugar can explode.

Therefore, think about the inflationary implications and what that means for equities.

Watch the prices of groceries and restaurant menus.

Food porn can easily go from erotica to hyperporn! 

S&P 500 (SPY – Inside day. Swing high at 287.76. Now we watch which way the inside day reconciles.

Russell 2000 (IWM) – Inside day. 154.40 pivotal support and 156.70-157.10 area to clear.

Dow Jones Industrial Average (DIA)  – New swing high today at 263.94. 

Nasdaq (QQQ)  – Swing high 184.92-through 184.50 expect another new swing high. 

KRE (Regional Banks) – 53.40 now support on a weekly close and 54.25 the 50 DMA to clear.

SMH (Semiconductors) – 110.60 pivotal support with 114.55 the all-time high.

IYT (Transportation) – Inside day. Watch which way the range reconciles.

IBB (Biotechnology)  – Lagging behind. 115 key resistance and must hold 111.20 area.

XRT (Retail) – 45.50 resistance cleared today. Granny at it again!

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The author may have a position in the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

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