If you’ve been to the grocery store lately, then you’ve probably noticed food prices are going up.
Eggs cost more. Milk costs more. Coffee, cheese, beef, and even tofu all cost more.
That’s a bad thing, of course. Nobody wants to pay more for groceries.
But, it’s a good thing for traders who own agricultural commodities. It took longer than expected, but the “Ags” are finally running higher.
We first noticed the potential for a bullish move in agricultural commodities two months ago. We pointed out that potential again in early-July. And, our persistence started paying off last week.
The Invesco DB Agricultural Fund (DBA) has broken out to the upside of a four-month-long consolidation pattern. And, there’s plenty of room for it to run higher. Take a look…
DBA has broken above the resistance line of its consolidation pattern. The next resistance level is up near $14.75 per share. And, over time, DBA could challenge the March high near $15.60. All of the various moving averages (the squiggly lines on the chart) have turned higher and should now offer support on any short-term declines.
So, the downside is limited to just a few nickels. And, the upside could be another 12% higher from here. This is a good-looking risk/reward setup. Traders should use any pullbacks in DBA as an opportunity to buy into a position.
The bad news, of course, is that higher Ag prices will ultimately lead to even higher grocery prices. With any luck, though, we should be able to make enough money on this trade to offset the increased grocery expenses.
Best regards and good trading,
Jeff Clark
Reader Mailbag
Jeff Clark Alliance member Travis shares his recent gains based on Jeff’s training…
Hi Jeff, I really enjoyed the training classes that came with my recent Alliance membership. I even signed up for StockCharts. So, armed with new tools and knowledge, I looked at a recent Palm Beach Quant sell signal on a MSFT put, for a 40% loss. After pulling up MSFT on StockCharts, I noticed it had bounced right off the lower resistance level, on the hourly chart. It looked like, based on your training, it was unlikely to keep falling.
I held onto the option and it came back up, finishing flat for the day. Today I sold for 130% gain, after it smacked into its upper resistance level, and was unable to push past. I know you promote your services for both direct recommendations, and to help with our own decisions, so I thought you might appreciate the note, especially in this difficult option market. Thanks.
– Travis
Thank you, as always, for your thoughtful comments. We look forward to reading them every day. Keep them coming – and send us any questions – at [email protected].