December 21, 2020
By Mish Schneider
Written by Mish and Forrest
Monday has brought a string of events as the country waits for congress to vote on the stimulus bill, to the possibility of another wave of covid, as a mutation of the virus is currently spreading throughout the UK.
With worries that the current vaccine rollout might not have an effect on the new strain, the market opened lower.
If you weren’t watching the market and had only read morning headlines, you might have expected a sorry sight at the close, yet by the end of the day each index closed green filling the gap created from this morning's opening price.
While the market shrugged off today's negativity, it should be noted that equities weren’t the only ones to participate in today's rally.
Commodities joined in too, showing that we can’t forget about underlying supply and demand.
The pandemic has shown that supply chains can be very fragile and will take time to build back to their previous pre-pandemic state.
Even more, La Nina has arrived this year potentially affecting food commodities going into the next year.
With that said, checking the weekly charts can give us a good picture of how certain commodities have been setting up longer term.
Above is DBA, an agriculture ETF.
It’s recently had a recuperation phase change when it cleared the 50 week moving average.
Though it's been stuck in a downtrend, it made a solid break over the moving average and if it continues, could be setting up for a very large move.
Corn made an even cleaner brake when it crossed the 50-WMA in October.
Like, DBA it’s between the 200-WMA and the 50-WMA.
Clearing the 200 would bring this into an accumulation phase, which for many of the food commodities hasn't been seen on the weekly chart in years.
While we’ve profited off both of these based on phase changes in multiple time frames, the long-term picture shows that going into 2021 these might just be getting started.
Russell 2000 (IWM) Strong close over the 10-DMA at 192.72
Dow (DIA) 303.80 to clear.
Nasdaq (QQQ) Holding over 308.60. With more support the 10-DMA at 306.43
KRE (Regional Banks) Resistance 200 week moving average 52.66 to clear. Support 48.48
SMH (Semiconductors) 221.79 high to clear. Support 210.41
IYT (Transportation) Looking for a close over the 10-DMA 222.47. Support 213.96
IBB (Biotechnology) 152.13 level to hold.
XRT (Retail) 64.09 to clear.
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