Post FOMC-A Look at 2 Commodity ETFs

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I cannot remind you all enough of how important it is to check the Inflation Trifecta before getting too attached to inflation, stagflation or deflation. 

1. Silver to gold-gold remains an outperformer but if that changes, we look like stagflation possibly a speed bump to recession. 
2. The Dollar-While dollar is in contraction, it is holding 103-should that fail, we see 100 next 
3. Sugar futures-Sugar is starting to rally, and a move over 20 cents a pound a warning-not to mention corn and wheat trying to base. 

DBA is the ETF that holds a basket of agricultural and soft commodities. 

I show 3 timeframes. Daily, weekly and monthly. 

The daily chart shows DBA under the 50-DMA in a warning phase.  

However, the price is currently pushing against the January 6-month calendar range high. 

The weekly chart is in a bull phase, well above the 50-WMA. 

The monthly chart is in expansion, even after the recent correction. 

The bigger point is that DBA shows nothing to suggest deflation.  

Plus, a push above the 50-DMA will look rather bullish, if not more inflationary. 

As for DBC, that is the ETF basket that holds metals and oil. 

In contrast to DBA, DBC is in a daily unconfirmed recuperation phase, with today’s close back over the 50-DMA. 

Note though, DBC outperforms the SPY and the momentum indicator shows a clear bullish divergence. 

Good news. 

As for the weekly chart, DBC has work to do to get another 50-WMA. 

The monthly chart has not given us a sign that DBC is in expansion, still under the 23-month MA. 

Nevertheless, the sideways consolidation is notable. 

Bottom line is that DBA is solid, meaning that we could see a lot more upside in ags and softs. 

DBC is also solid and while not inflationary, it does show the potential to break out or below a huge consolidation, which would be a very interesting indicator to follow for metal and oil inflation or deflation. 

My take-inflation can get stickier, while it might be a bit premature to load up on that possibility.  

 

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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ETF Summary  

(Pivotal means short-term bullish above that level and bearish below)  

S&P 500 (SPY) 575 big resistance 560 support 

Russell 2000 (IWM) 202 support 215 resistance 

Dow (DIA) 415 support 421 resistance area 

Nasdaq (QQQ) 485 resistance 

Regional banks (KRE) 54 support 58 resistance 

Semiconductors (SMH) 222 support 245 overhead resistance 

Transportation (IYT) 65.00 pivotal 

Biotechnology (IBB) 134 support 140 to clear  

Retail (XRT) 70 now resistance to clear