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Commodities and the January Trend Trade

January 26, 2025

Mish's Daily

By Mish Schneider

I am all about following price this year more than ever.

In fact, I will go so far as to say, the credo should be first price then narrative-again this year more than ever.

On the notion of inflation, disinflation, deflation or reflation, this concept is also more important than ever.

What will the Fed do? What will Trump’s policies lead to? What if and so forth and so on?

Just watch the key commodities and that will tell you how and when the narrative changes.

In the past I wrote that folks are looking for inflation in all the wrong places.

This year I am changing that slogan as inflation will not be so readily disguised.

It could be hiding in plain sight.

Let’s look.

Just for the fun of it, and to emphasize that Mother Nature has the last word, look at the coffee chart. Coffee futures are on new all-time highs.

Using the calendar ranges, gold also has made yet another breakout from the January calendar range high and is inches from making a new all-time high.

Silver has yet to outperform gold.

But I am willing to go out on a limb and say that if futures breakout over $32 and ounce and the ETF takes out the January high (depicted with the horizontal green ling), be prepared.

You will see how quickly the narrative on inflation shifts if silver begins to outperform as we predict.

The same is true for my favorite narrative changer, Sugar.

This is the spot futures for Sugar. The January calendar range high is 19.94 so we are not there yet.

But the reversal from the massive support level is impressive.

The momentum is improving.

Sugar is key. Watch it.

For those playing along and reading the Daily, you know I did a piece on corn futures right at their lows of the year.

To see the whole agricultural and soft commodities picture, DBA the ETF is reliable.

DBA cleared the January calendar range last week. That is bullish.

It filled the gap from December 19th. That is bullish.

A move over 28.00 will blow the doors off of inflation and in the worst possible way-food prices.

You think the narrative will change then?

And what will the President and Chairman of the Fed do about it?

I left out a lot of commodities for brevity’s sake.

However, I would continue to watch copper, oil, uranium, natural gas and livestock, which also just made a huge run higher.

You want to become a better trader this year? This post and the last one on indices and sectors show you the way.

Price rules and fundamentals drool.

Educational purposes only, not official trading advice. 

For more detailed trading information about our blended models, tools, and trader education courses, contact Rob Quinn, our Chief Strategy Consultant, to learn more.

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