AA (Alcoa Inc.) will be added directly as an Active Short Trade here around the 16.62 level following the breakdown of this very steep, nearly 12 month old uptrend line. Targets are shown as T1 & T2 on this daily chart and the exact suggested buy-to-cover levels & stops will follow soon. To add to the case for a reversal in the steep advance in AA over the last year would be the fact that the Dow Jones US Aluminum Index ($DJUSAL) has run into the bottom of a significant long-term resistance zone while at rarely seen overbought levels that have historically preceded major tops in aluminum prices.
Active Trades are trade ideas that were previously posted as Trade Setups and have since triggered an entry or occasionally, a trade idea that was first posted directly to the active trades category as offering an objective entry at the time of the initial post. Active Trades might also be listed in one or more of the other trade categories as these categories are not necessarily mutually exclusive. e.g.- An Active Trade that still offers an objective entry might also be categorized under the Trade Setups category. Likewise, an Active Trade with multiple prices targets may have already hit one or more of those initial targets with additional target(s) remaining, thereby falling under both the Active Trades and Completed Categories. Traders should look to make any new entries or add to existing Active Trades objectively, such as a on pullback to a support level during an uptrend or a re-test of a broken trend-line, wedge, or channel pattern.
SOYB (Soybeans ETF) will be added directly as an Active Long Trade at current levels (last trade was 20.46). I will make a case for the SOYB long trade below but keep in mind that SOYB is a thinly traded ETF and is one of several active long trade ideas in the soft commodities/agricultural industry. I also plan to likely add DBA (agriculture ETF) which holds the following stakes in various ag related commodities, including a target of 12.5% in soybeans futures. Click on this DBA holdings chart to view the complete current weightings in DBA. With plenty of liquidity and the added benefit of diversification amongst various agriculture commodities (which can also act as a drag on performance, should some of the components lag), DBA is certainly a viable option for traders or investor seeking exposure to the ag sector at this time. I’m not bullish on all of the components of DBA, hence my reasoning for posting, as well as personally going long only select agricultural commodities at this time. However, with that being said I do think the chart on DBA is setting up bullish and will cover DBA in a separate post soon.
Although one could certainly trade soybean futures in lieu of SOYB, the trade ideas on RSOTC are limited to individual stocks and exchange traded products (ETFs, ETNs, CEFs, etc…) as those are the most popular and accessible trading vehicles for the majority of traders and investors. Each individual may opt to trade futures contracts, options, or leveraged ETFs as a play on any of the trade ideas shared here. Even with the low volume on SOYB, the spreads do not seem excessive and unlike closed-end funds (CEFs), which often trade at substantial discounts or premiums to the underlying holdings, SOYB trades at NAV. With that being said, I typically prefer to use limit order vs. market orders on thin volume stocks & ETFs.
As with the recent WEAT & CORN trades, SOYB is clearly an attempt to catch a falling knife as prices have been in a powerful downtrend since peaking earlier this year. Therefore, this trade should be considered fairly aggressive until/unless we get some decent evidence of a trend reversal. Looking at the weekly chart of $SOYB (the spot price of soybeans), it appears that soybeans have fallen to the bottom of a decent support zone following a rarely seen overbought reading on the RSI 14. As this chart illustrates, very sharp rallies have immediately followed shortly after the RSI reached oversold levels. In fact, the exact bottoms did not come on the initial oversold reading but very shortly afterwards following a higher low on the RSI, such as we now have.
Zooming down to the daily time frame, $SOYB printed a hammer candlestick yesterday which is a potential reversal stick (pending upside follow-thru over the next few sessions). $SOYB also has very strong bullish divergences in place as it just tagged what appears to be the bottom of a descending price channel. My targets for SOYB will be roughly based off of this daily spot price chart as well as soybean futures. T1 (the 1168ish area) is my first & preferred target at
As a follow-up to the previous post with the $CORN (Spot Corn Prices) weekly chart, below is the 5-minute chart of US Corn Futures as well as the weekly chart of CORN (Corn ETF), highlighting the current volume surge which is indicative of a selling climax.
click here to view the live, streaming chart of US Corn Futures. Once the page to Investing.com opens, from the top of the chart select: Instruments/More Instruments & then “U.S. Corn Futures” under the Commodities section.
In the most recent update on the CORN (Corn ETF) Long-term Trade idea posted last week, it was stated that CORN had broken the 25.60 support level (below the recent consolidation range) which would likely open the door for a move down to the 340 major support level on $CORN (spot corn prices). Since the original post on the CORN trade idea back on July 28th, I had highlighted two likely scenarios for $CORN: either a bounce from around where $CORN was trading at the time OR a continued move down to the 340 level in which not only bring corn prices down to a key long-term support level and that we would also likely have strong bullish divergences in place on the weekly PPO when/if prices got there.
Although the chart of $CORN (spot prices) is an end-0f-day (EOD) chart, not updated until after the market close each day, I’ve been watching US Corn futures today and so far they kissed a low of 335.87 just a few minutes before I started working on this post and have since reversed sharply so far. Of course the day is still young but regardless of any short-term gyrations, we now have corn prices at key long-term support while extremely oversold (the weekly RSI 14 on $CORN was at an extreme level of 23.73 at yesterday’s close). We have the strong bullish divergences forming on the PPO as well as volume patterns on CORN (corn etf) that are indicative of a selling climax (ditto for WEAT, which I will cover under a separate update).
After stopping out the recent Active Long (swing trade) on CORN last week, I am going to add CORN back on as a new Long Trade idea. I also believe this is an objective area for a new entry or add-on to an existing position for the CORN Long-term Trade idea (investment) that was initiated in the July 28th post.
The HIBB (Hibbett Sports Inc) short trade hit the first target today for a 13% gain. HIBB came within 3 cents of hitting the first target, T1 at 43.48, exactly one month ago today before making a failed attempt to backfill the large gap and although it took a bit longer than I had expected, the first target was finally reached today. Consider booking partial or full profits and/or lowering stops, depending on your trading plan. T2 (40.35) remains the final target.
Note: New trade ideas and market updated have been far & few between lately. This is a reflection of both my own trading activity, or more accurately the lack thereof, as well as the fact that I’m just not finding many very attractive long setups with solid R/R profile. Although I do have a considerable watchlist of short trade ideas, the current uptrend in the broad market without any clear short-term bearish pattern formations dampens the R/R on even the best looking short patterns. I’m waiting for some half-decent signs of a likely reverse or even a short-term sell signal in the broad markets before taking on any more short exposure although I may take a shot at an APPL short, should I fail to be impressed with their latest product announcements tomorrow as a bearish technical case for the stock has recently been outlined.
Starting with the longer-term picture for gold & the gold mining stocks, I will be waiting to see how $GOLD (spot gold prices) close out the week as $GOLD closed right on the nearly 13 year long-term uptrend on Friday, a key major support level. As with all weekly charts, it is the end-of-week (Friday) close that matters as intra-week spikes below support are not unusual. As mentioned in the past, should $GOLD make a solid weekly break below this long-term uptrend line, that would open the door for another test of the mid & late 2013 double-bottom lows, the next major support level for gold. A link to the live, annotated weekly chart of $GOLD is available on the Live Charts page and can also be viewed by clicking here.
Moving down to the 4-hour period of GLD that I’ve been covering lately, following last Tuesday’s gap below the symmetrical triangle pattern (bearish), followed up by Thursday’s failure upon backtesting the triangle pattern from below (additional bearish confirmation), prices are likely headed towards the aforementioned 119.50ish support area before any significant reversal. Therefore, my best guess for gold prices in the near-term,
I was asked my current thoughts on gold, silver & the mining stocks today along with the fact that the Bollinger Bands are tightening and my reply was this:
Not much to add to what I posted on Tuesday which was that the price action in both GLD & SLV that day has near-term bearish implications on both the metals and the miners. I’d like to see how the week finishes out before making any decisions on my positions but with the BB pinching and the Tuesday’s bearish price action in the metals, the possibility for a flush-out move to the downside is certainly elevated at this time.