Commodity ETFs move lower on confluence of technical indicators

INTERMEDIATE TERM SIGNALS & MARKET ANALYSIS

ETF ANALYSIS FOR:

DBA – JJG – GLD – JJC – USO – UNG – FXE – EEM – SPY

Core Position:     $50,000,000
Current Profits:
$1,459,989 (2.92%)
Largest Drawdown:
         $160,590 - (0.32%)
Return-on-Risk:
                  9.09 : 1
(UNLEVERAGED and FULL SHARE VALUE)

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

PowerShares DB Agriculture (DBA):
10/26/2012 Closing Price: 28.81
INTERMEDIATE TERM (I.T.) SIGNAL
:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Downside Targets = 28.59 – 28.34
Projected Weekly Range: .68
Trading 185,000 Shares
I.T. ANALYSIS:

  • DBA trade losses since 07/25/2012 equal $99,000 or 0.20%.
  • 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.
  • Following a strong bullish OVB, last week failed to violate either the high or low, creating an inside vertical bar. Although price action was bearish last week, closing below the midrange, below the open and below the previous week’s close, the 78% chance of trading 29.47 before 28.57 still exists. Failure to follow though is certainly a bearish indicator, especially when paired with Friday’s close in the bottom 3% of the weekly range. If the OVB fails and price action leads to lower trading this week, expect strong support to appear within our downside target range.

IPath DJ-UBS Grains (JJG):
10/26/2012 Closing Price: 58.39
INTERMEDIATE TERM (I.T.) SIGNAL
:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Downside Targets = 56.94 – 55.80
Projected Weekly Range: 2.16
Trading 87,000 Shares
I.T. ANALYSIS:

  • JJG total trade profits since 07/25/2012 equal $38,280 or 0.08%.
  • JJG is concentrated in agricultural grain futures, holding 46% soybeans, 30% wheat and 24% corn.
  • As expected, price action followed through last week with slightly higher trading yet largely within the previous week’s range. For over a month JJG has trended sideways, failing to establish a clear direction. Sideways movement occurs when the market is unsure about current price levels, usually correcting or rallying significantly. In most cases, the longer prices remain within a confined range, the larger the break-out movement. Price action was bullish divergent with a higher high and higher low, yet bearish weekly close. Last week formed a VRCB due to largely equal buyers and sellers, and also reduced trading volume.

SPDR Gold Shares (GLD):
10/26/2012 Closing Price: 165.93
INTERMEDIATE TERM (I.T.) SIGNAL:

Intermediate Term Trend is bullish.
Current Position: FLAT
Current Downside Target = 162.41
Projected Weekly Range: 3.07
Trading 35,000 Shares
I.T. ANALYSIS:

  • GLD total trade profits since 07/25/2012 equal $413,695 or 0.83%.
  • GLD’s single holding is gold bullion.
  • Trading was as predicted last week. GLD fell further on the current correction, confirming the bearish price action with a weekly close below the midrange, below the previous open and below the previous close. This correction was expected due to the reversal of volatility and buying-selling pressure indicators nearly a month ago. The formation of dual weekly Volatility Reduced Compression Bars at the top of a fast rally is an exceptionally strong indicator of a correction to follow. Trading should definitely be lower this week, but the late intraweek rally could result in sideways movement. Currently approaching our downside price target, we expect GLD to find strong support above $161.

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