Turnaround Tuesday-The Commodity Index Tracking Fund

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Look at the headline of this chart and you can see that global FMS allocation to commodities is at a 7-year low.

This is fascinating, particularly the day before the FOMC meeting and after an increase in M2 over the last several weeks.

We also had a positive reading in the Empire manufacturing numbers.

And we saw a stronger than expected headline for retail sales.

We expect the Fed to cut by .25% but talk dovish going forward.

Perhaps gold will take a rest.

But that hardly means anything in terms of a potential stagflation environment, as gold might pause while silver takes over.

Nonetheless, for turnaround Tuesday, I would like to turn your attention to DBC, the DB Commodity Index Tracking Fund.

When analysts try to prove that inflation is dead, they often show this chart.

Now I show it to illustrate that commodities could be ready for a huge comeback.

DBC tracks an index of 14 commodities. It uses futures contracts to maintain exposure and selects them based on the shape of the futures curve to minimize contango.

The ETF represents 14 commodities drawn from the Energy, Precious Metals, Industrial Metals and Agriculture sectors via futures contracts.

After a new 60+ day low on September 10^th, the next day the price traded within that range. And then on September 12, DBC gapped higher leaving a reversal bottom intact.

The mean reversion for DBC looking at our Real Motion occurred on September 10^th.

Now, and the most fascinating part of this chart, is that we are seeing a BULLISH divergence in momentum as the red dotted lines sit on the moving averages.

While DBC underperform SPY, we will look for that to change.

Meanwhile, Geoff and I launched our first weekly video podcast-link below-please have a listen. We can use a name for it so any suggestions are greatly appreciated.

Furthermore, we will want to see DBC clear the 50 daily moving average and change phases to recuperation.

 

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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Mish in the Media-Want to see more? All clips here

MarketGauge.com Mish and Geoff discuss how to anticipate and trade current market conditions using MarketGauge's Big View market timing ratio, the XRT ETF and more. 09-17-24

Stockpick.app StockPick.app presents Mish’s lessons in understanding bonds 09-17-24

Business First AM Mish on 3-D printing and a stock to follow 09-16-24

ProInvestor Insights A comprehensive monthly guide for investors-see Mish’ article on EVs and the future 09-15-24

WealthWise CrossCheck Fed rate cut predictions and top picks 09-13-24

Schwab Network with Nicole Petallides From metals to solar to EVs to vanity trades-mish covers it all 09-12-24

Financial Sense with Cris Sheridan On Commodities, Stagflation and Big Spending 09-13-24

Business First AM Listen to Mish’s optimism and trade pick to hang onto 09-13-24

Maggie Lake Mish and Maggie explain the signs to look for before making your next investment decisions 09-09-24

Stockpick.app Mish talks why Tesla interests her right now 09-10-24

Business First AM Why some discretionary stocks are on Mish’s radar. 09-09-24

Business First AM What would hurt the tech rally and the Nvidia Cultists? 09-06-24

CNBC Asia Street Talk A clip on tech, NVDA and where the stock is a buy 09-05-24

*Lead-Lag with Michael Gayed 40 minutes and everything we believe could happen in the upcoming year 09-04-24 A better link published soon

 

Coming Up:

September 18 Mario Nawfal Spaces-Before FOMC

September 19 Kitco News Interview with Jeremy Szafron

September 25 Singapore Radio

September 26 Love Coaching for Members

September 27 Real Vision

Weekly: Business First AM, stockpick.app

 

ETF Summary

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

S&P 500 (SPY) 560 now pivotal

Russell 2000 (IWM) 210 pivotal 220 resistance

Dow (DIA) New all-time high and reverse???

Nasdaq (QQQ) 465 support 477 resistance

Regional banks (KRE) 57 pivotal

Semiconductors (SMH) 230 support 240 pivotal

Transportation (IYT) 67.00 pivotal

Biotechnology (IBB) 145 support 150 resistance

Retail (XRT) 73.50 support 77 resistance

iShares iBoxx Hi Yd Cor Bond ETF (HYG) Made a new high and closed on the lows of the daily range-keep watching