Ho Ho Ho-Santa Might Want Sugar With His Cup of Jo!

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What is up from the lows? Commodities. What will be my main focus for the end of the year and the start of the new one? Commodities.

Why? 5 reasons.

1. El Nino and drought
2. Growing world population that needs to consume
3. The careful-what-you-wish-for inflation target of 2%
4. The inevitable end of a long bear cycle in many
5. Geo-Political instability, which can take its toll.

Notice I do not mention the dollar or interest rates. Nor am I terribly concerned with OPEC. Commodities fuel themselves. Usually because of fear and greed.

For those of you looking forward to more Modern Family and their upcoming National Lampoon’s Christmas Vacation, suffice to say that the visit from Cousin Yellen has not been well received.

But no worries, I will come back around to them after they all digest the setback. And they will.

Before I go through a few commodities, I believe a look at solar energy is also merited. Phase wise, First Solar has the best one. Regardless of the potential reversal on Thursday, FSLR is in an Accumulation phase with a Golden Cross pending.

The others such as Canadian Solar, Solar City, Sun Power and Trina Solar Ltd are either in bear or recovery phases. If we look at the ETF for Solar, TAN, there is a potential triple bottom.

I would not worry about missing out however. Should that bottom confirm, there will be plenty of opportunities over the next few months.

Sugar (SGG) and Cocoa (CHOC) are the winners in the soft commodities since both have had huge runs and are currently in Bullish Phases. With neither overbought, both have way more potential for further gains.

Coffee (JO) is percolating (sorry for the obvious pun). Like Solar, I am not too worried about missing the boat. When that turns and proves it can sustain in a strong Recovery that will be the best time to invest.

Cotton (BAL), with a weekly close in cash over 64.00 gets interesting. Take note.

For Grains, I prefer to look at DBA or the Power Shares DB Agricultural Fund ETF. Again, watching the basing action, but no need to get super excited just yet. CORN filled a gap to 22.24, which typically suggests more upside to come.

Concerning metals, I am watching Copper and Silver. Global Copper (CU) is not giving us much yet, but it is holding the September lows. That could be something. Same with Silver.

Oil, as with CU and SLV, is holding the October lows. Energy and Oil Services are both far above those lows. In substantial trading ranges, OIH and XLE should be kept on your radar screen for when those ranges reconcile. And they will.

Call Commodities your stocking stuffers. Many of the ETFs have very small open interest. The Futures are still best option. However, please hang the ETFs above your fireplace since from the acorn grew the mighty oak.

And when Santa swoops down the chimney this year, imagine he will want chocolate cookies and a cup of Jo with sugar to wash those cookies down.

S&P 500 (SPY) 206.60 now pivotal the 200 DMA with 204 the 50 DMA

Russell 2000 (IWM) 115.40 the 50 DMA support with 116.90 pivotal area to clear

Dow (DIA) 173.20 the 50 DMA with 175.70 the pivotal area to clear

Nasdaq (QQQ) 112.07 support then 110.10. I expect we might see a narrow range day on Friday. Back over 114 would be a relief

Volatility Index (VIX) Ran right up to the 50 DMA and stopped

XLF (Financials) 24.25 now pivotal with 23.85 the 50 DMA

KRE (Regional Banks) 44.79 pivotal with 43.25 support

SMH (Semiconductors) Doesn’t really look like a reversal-more like a correction following the down move in the indices. 55.25 good number to hold. Looks good on weekly and monthly charts

IYT (Transportation) Trannies and its stomach issues-Lets look for a new 60+ day low and bounce confirm-wishful thinking

IBB (Biotechnology) Broke the bear flag but held the 50 DMA. A bounce saves it. If not, 300 is next

XRT (Retail) Wanted to see this hold 44.00 but it didn’t. Now, 43.00 is where the strong buying started coming in

IYR (Real Estate) Broke all the moving averages but into some daily chart support

ITB (US Home Construction) I would be out of the long but waiting to see if it can hold above 27.50 for possible re entry

GLD (Gold Trust) A possible 2-day reversal pattern

SLV (Silver) Had volume but still needs to prove itself that it can hold recent lows and clear 13.60-13.80

GDX (Gold Miners) Looks the best and now has to hold 13.75 and really clear 15 to look like a true bottom

USO (US Oil Fund) Held 12.37 with an inside day

OIH (Oil Services) Been in a range since early October-it’s getting ready to do something-especially if clears 32 or breaks 29.25

XLE (Energy) Testing bottom part of the range so if holds still a chance

XOP (Oil and Gas Exploration) Similar to XLE

TAN (Guggenheim Solar Energy) Triple bottoms will prove itself better if can take out the 50 DMA

TLT (iShares 20+ Year Treasuries) A dose of reality set in-watching TBTs now to consolidate

UUP (Dollar Bull) Coming close to 3 major moving averages as support at 25.25

EWP (Spain) Could be basing here too