Rain is a Good Thing

“It all depends on the water…”

Rain is a Good Thing by Luke Bryan

Note the soft commodities bouncing back today here, beyond coffee.

I am long the wheat fund, and you can see the soft commodity ETF break a well-defined downtrend to the upside.

I believe all softs are in contention for upside snapback rallies in the next few weeks, provided this breakout hold.

Perhaps a little rain (the selling) may be a good thing for softs this autumn.

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Lots of reversals today and choppy action in the tape.

I have not made any fresh trades today, and am close to rearranging my portfolio this afternoon.

Coffee is still the standout for me, as the final piece of my Tekmira gets pounded–Fortunately, I scaled most of those gains late-last week.

We have some real carnage out there, too, as far as names like ADHD GTAT RBCN SNSS. So, this may be a sign of more meaningful change in character, considering this should be our usual V-shape to new highs.

Here is that coffee ETN weekly chart, showing extreme strength this morning.

Note coffee gapping free and clear of its upper weekly Bollinger Band, effectively quite overbought now.

However, if coffee is indeed beginning another leg higher in its impressive 2014 rally, we should see overbought conditions persist for quite some time.

I stil retain a piece of my original position inside 12631, and am considering adding back or selling depending on that very circumstance.

Elsewhere, we traded GTAT as a long for a nice win over the summer in 12631. But today’s abrupt bankruptcy drives home the point to always know whether you are engaging in a trade or an investment. We took it for a trade when it had a healthier chart–But the chart then weakened considerable, presaging elevated downside risks.

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There rotation within the Ebola stocks, from drugs (TKMR) to hazmat suits (LAKE), appears to be underway this morning.

The Lake Show needs to get back over $9, though, as it struggled with it this morning.

But the big mover for me is the coffee commodity, JO, once again.

The coffee trade has been a staple of the 12631 Trading Service in 2014, and it looks to be on the cusp of another breakout.

More on this later.

What are you trading this morning?

The following is just a small excerpt from my latest Weekly Strategy Session (please click on that hyperlink for details about trying it out) which I published for members and 12631 subscribers this past Sunday.

 Precious metals and their miners, not to mention base metals and miners, perhaps even crude oil, continued to get pounded last week, rendering any bullish theses in these Strategy Sessions to be flat-out wrong. 

Headed into this week, the resurgent U.S. Dollar likely holds the key as to whether a snapback rally in the above commodities and miners will be able to materialize. The squeeze higher in the Dollar has been ferocious and smacks of major market players being caught out of position. 

Should the Dollar rally persist, and effectively “go parabolic” as it breaks the steep rising channel (light blue lines, below, on the Dollar ETF daily chart), traders should stand aside from commodities and wait for subsequent Dollar weakness which sticks before probing any long metals and miners plays. 

Please click here to continue reading

For you night owls out there, feel free to drop me any market/trading-related topics you would like me to cover in a weekend video.

In addition, anything else about the current market, feel free to drop below.

Speak your mind, night owls.