Two tradable commodities

August 1, 20132 Comments

In my last blog (https://www.valuetrend.ca/?p=2361) I discussed gold and oil – two commodities that have been in the spotlight of late. But what about the investment or trading potential of some of the other commodities?

Commodities such as corn, coffee, sugar and other agricultures are in major downtrends. So too are livestock and industrial metals such as copper. In fact, as I reviewed the major commodity groups for general trends and investment potential, only a few stood out as attractive long-trading investment candidates.

 

Natural Gas

One of those positive outliers within the commodities group may be natural gas. Natural gas has been basing since early 2012. Currently at the bottom of its trading range, Nat Gas can be played through the United States Natural Gas Fund (UNG-US). Traders might consider buying near $18, and selling near $24. If it breaks out through $24, a new bull market might be implied for Nat Gas. If it breaks much below $18 (short spikes may be acceptable), this would be a new bearish signal and a sign to avoid or exit this trade. Horizons also has an ETF that trades in Canadian dollars (currency hedged) on the TSX (HUN-TSX).

Gasoline

Gasoline has also been trading in a range since around mid-2012. The longer termed trend isn’t too bad either. The United States Gasoline Fund (UGA-US) seems to be moving between support at $54 and technical resistance in the low-$60’s. Consider buying at $55 support and selling around $62-$64 for a trade. Its near the top of that range at the time of writing, so you may want to wait on this one. Oh, before anyone asks – if I think that a head and shoulders top is forming on the weekly chart below—my answer is, as always, pay attention to the neckline before pre-supposing any topping formation. I covered this extensively in my book, Sideways, but for the record – if and only if gasoline breaks $54, then a head and shoulders top would be confirmed. Until that point, gasoline must be considered consolidating in the near-term, with a bullish long term trendline.

Pickings are thin for investors wishing to hold positive performing commodities in their portfolio. Fighting a major cycle such as the 33 year commodity peak highlighted in my blog here (https://www.valuetrend.ca/?p=672)  can be a game with the odds stacked against you.

2 Comments

  • Hi Keith,

    I read all your books and for sure it are simplier to read than to read a charts. I have been looking at the TSE chart and wandering if a double top is perhaps forming. Your guidance would be well appreciated.

    Thanks

    Paul

    Reply
    • Hi Paul – thanks for reading the books and the blog!
      No, I dont see the makings of a double top on the TSX. Instead, the TSX has gone sideways since August 2011 with a lid of around 12,800-12,900. Thats a major wall of resistance, and one I wont hold my breath waiting to crack, at least until the winter.

      Reply

Leave a Reply

Your email address will not be published. Required fields are marked *

Never miss another blog post!

Get the SmartBounce blog posts delivered directly to your inbox.

Topics

Topics

Recent Posts

sector performance 22 days

Sector rotation update

budget 2021

A heads up on the budget, and a rant

HMMJ

Buy the rumor, sell the news

% stocks over 50 day MA

Bear-o-meter says risk is neutral

sentiment cycle

Potential market top approaching?

mtum

Get ahead of the next momentum trade

cta-bg

Never Miss an Opportunity

Sign up for our newsletter to receive valuable insights that are available only to subscribers.   Beyond the blog – beyond the videos – get the inside scoop.

Scroll to Top