I am aware that we are in for some volatility the likes we have not seen since the Great Recession of 2009. This will be a period where what gets done today will seem right, will seem very wrong in a couple weeks, and will again seem like the right thing to do in a month. Unless you want to day trade your position, you will be on the wrong side of your position from time to time. This is where marginal positions will be most taxing on your psyche.
There are a lot of things happening across a broad range of markets, and this is what is giving me some encouragement. No, we will not see new highs, but the grain markets have refused to collapse despite many other outside markets collapsing. When some of the corresponding markets find a foot hold, I think we will get the bounce needed to make some grain sales.
Let us begin by looking at the Dollar.
The dollar printed its daily cycle low on Tuesday, so we now in the beginning of a new daily cycle. The type of move we had Wednesday puts a lot of pressure on stocks and commodities, however then entire grain complex held up well. The dollar is now trading towards an intermediate cycle low between May 10 and May 24. We want to have grain sales made prior to the next collar cycle bottom.
There are three ETF's that I watch which are an important index for grain farmers. The first is DBC, which is the basket of all commodities, including lumber, copper, oil and ag commodities. DBA is the second I watch, and is comprised primarily of corn, soybeans, wheat and sugar. The other is JJG, which follows just corn, soybeans and wheat. The third and newest is JJG which is just corn, soybeans, and wheat.
What I would like to point out on DBC is that within the entire commodity complex, we are at an area of support spanning three years. Commodities have yet to confirm a bottom, but are in the timing band for a low. Besides that, DBC will be forming a buy signal on the CCI oscillator. This tends to be a pretty reliable trend reversal tool.
Agriculture DBA shows an even longer trend line support going back 4 years.
The grain only ETF JJG is chart is from the shortest period of time, but also shows a truer trend line in my opinion with 4 touches.
When a trend line fails, it marks a change in the market place. Something becomes different that was driving the market. This trend line could hold, but the exodus of funds holding any commodity could be the driver that breaks the trend. I am nearby neutral, long term bearish, but short term optimistic. This should provide the opportunity we have been looking for to get some sales on the books.