If this is truly shaping up to be a time for commodities, especially ones undervalued, then let’s expand beyond gold and silver.
Don’t get me wrong.
I see more upside in both metals.
Remember my trifecta of inflation indicators?
- Silver to gold-has to outperform-maybe starting
- The Dollar breaks 100-not yet
- Sugar-has to clear 22.50 cents a pound-almost
Add to that soybeans because often we have seen silver and soybeans rally together.
Here is sugar right now
I see a massive bull flag forming with a measured move slated for sugar to make a new 52-week high if the pennant of the flag breaks out to the upside or at around $.22.5 cents a pound.
Note how it is about to outperform SPY on the Leadership chart.
And by the way, gold, silver, sugar and now perhaps soybeans are all rallying with higher yields and a stronger dollar.
Imagine if that changes and yields drop while the dollar softens?
Looking at the soybeans chart:
The daily chart on soybeans looks like a double bottom from August and now October.
In fact, if the November futures contract can clear the 50-DMA (blue), it also confirms that a double bottom is in place.
Furthermore, the momentum indicator or Real Motion is flashing a bullish divergence as the red dots are approaching the 200-DMA while the price chart shows price far away from its 200-DMA.
Leadership is also interesting with Soybeans about to perform on par with the benchmark.
The warning I wrote about yesterday in junk bonds HYG, sent the market lower.
However, many other voices in the room feel the same as I do-commodities are the way to go as we end this year and into the next one.
ETF Summary
(Pivotal means short-term bullish above that level and bearish below)
- S&P 500 (SPY) 575 support 585 resistance
- Russell 2000 (IWM) 215 support 227 resistance
- Dow (DIA) 420 support
- Nasdaq (QQQ) 485 pivotal support 500 resistance
- Regional banks (KRE) 60 pivotal
- Semiconductors (SMH) 242 support 265 resistance
- Transportation (IYT) 69.50 support
- Biotechnology (IBB) 140 support and like better over 142
- Retail (XRT) 74-75 support to hold
- iShares iBoxx Hi Yd Cor Bond ETF (HYG) 79.50 nearest key support