Commodity ETFs see reduced volatility and volume

INTERMEDIATE TERM SIGNALS & MARKET ANALYSIS

KEY TERMS
OVB:  Outside Vertical Bar
VRCB: Volatility Reduced Compression Bar

Core Position:
$50,000,000

PowerShares DB Agriculture (DBA):
09/21/2012 Closing Price: 29.78
INTERMEDIATE TERM (I.T.) SIGNAL
:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Downside Targets = 28.59 – 28.34
Projected Weekly Range: .72
Trading 185,000 Shares

I.T. ANALYSIS:

  • DBA is a comprehensive agricultural ETF. Holdings include fairly equally-weighted futures contracts in sugar #11, live cattle, corn, soybeans, cocoa, coffee, lean hogs, wheat, and cattle feeder.
  • DBA experienced its worst single-week sell-off since May 2012. After the previous week closed at new yearly highs, last week’s close was down 3.5%, largely due to bearish price action in the soybean and corn futures markets. The extreme volatility resulted in a rare technical pattern where a confirmation bar violates the previous bottom, immediately following a new high bar. This bearish pattern has led us to believe a correction will follow, stopping within the 28.59 – 28.34 price range. DBA has failed to establish a definitive direction since late July; for this reason we remain flat.

iPath DJ-UBS Grains (JJG):
09/21/2012 Closing Price: 60.32
INTERMEDIATE TERM (I.T.) SIGNAL
:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Downside Targets = 56.94 – 55.80
Projected Weekly Range: 2.33
Trading 87,000 Shares

I.T. ANALYSIS:

  • JJG is concentrated in agricultural grain futures, holding 46% soybeans, 30% wheat and 24% corn.
  • Our previous long position in JJG was profitably exited at 62.25, nearly two dollars higher than last week’s close. Our tight trailing stops limit initial risk and maximize locked-in profits. JJG is currently in a short-term correction, one that we believe will not violate the 55 price point. Price action was clearly bearish, confirmed by Friday’s close below the midrange, below the previous close and below the open. All trends are currently bullish and we rarely trade against the trend. This results in a higher percentage of profitable trades with smaller equity drawdowns. We will look for buy entries near our downside targets.

SPDR Gold Shares (GLD):
09/21/2012 Closing Price: 171.96
INTERMEDIATE TERM (I.T.) SIGNAL:

Intermediate Term Trend is bullish.
Current Position: LONG @ 158.81 on 08/21/2012; STOP @ 166.29 OR Weekly Close Below 170.06
Current Upside Target = 165.88 – 176.15: COVER 7,000 (20%)
Projected Weekly Range: 4.80
Trading 35,000 Shares; COVERED 3,500 (10%) @ 164.12, COVERED 7,000 (20%) @ 169.35

I.T. ANALYSIS:

  • Initial trade risk was $139,650 or .28%. Current trade risk is $0. Current trade profits are $414,540 or .83%.
  • GLD’s single holding is gold bullion.
  • Our current GLD position increased equity last week while most other markets gave back profits to lower prices. Although upward acceleration slowed last week, price action was still bullish, never retracing to the previous week’s midrange. The short-term trend reveals that the weekly range was very restricted until Friday, where a gap higher open violated the previous week’s high. The first four days’ range would have resulted in a VRCB, indicating buying pressure was beginning to be neutralized by selling pressure. We believe this wild upward move will slow down, yet prices will continue higher towards 176.15. Look to cover another 7000 shares at our upside target, locking in $121,380. If this week trades lower, look to exit the remaining 70% of our position at 166.29 or a weekly close below 170.06.

Page 1 of 3 >>
Comments
comments powered by Disqus