Time To Buy The Agriculture ETF? [PowerShares DB Agriculture Fund(NYSEARCA:DBA)]

Share This Article
February 6, 2014 3:15pm NYSE:DBA NYSE:JO

buy-and-holdMorpheus Trading: Agriculture ETFs are heating up, led by an explosive move in Coffee (NYSEARCA:JO), while Cocoa (NYSEARCA:NIB) is at new 52-week highs after several weeks of basing action (though it doesn’t trade much volume).


Powershares DB Agriculture Fund (NYSEARCA:DBA), which has about 11% exposure to Coffee and Cocoa, has also made an impressive move off the lows, breaking through the 40-week moving average on big volume:

$DBA bottom fishing

Presently, $DBA is too far extended for a low-risk entry point, but we will continue to monitor the action as we wait for a 4-5 base to form above the 40-week moving average.

We’d also like to see the 10-week moving average climb above the 40-week moving average, and for the 40-week moving average to turn up.

The longer-term monthly chart below shows that $DBA could possibly stall out above $26, as there is resistance from a prior swing low and a weekly downtrend line. The ideal price action over the next several weeks is for $DBA to break the downtrend line on heavy volume, then base out for several weeks above $26 (forming a “bull flag” like pattern on the weekly chart):

$MONTHLY DOWNTREND LINE

As with our current position in US Natural Gas Fund (NYSEARCA:UNG), one great benefit of $DBA is its lack of correlation to the main stock market indexes (because it is a commodity ETF). In weaker markets, ETFs really shine because of the ability to look for steady trends outside of the stock market trend.

Again, its much too early to enter $DBA, but it is certainly one to watch. As always, we will be promptly alerted of our exact entry, stop, and target prices if/when $DBA meets our entry criteria.

Natural Gas ETF (NYSEARCA:UNG) stalled out at the prior highs, failing to clear $27, for the third time in 6 sessions. The stalling action should lead to a few weeks of consolidation above $23, which would allow the 20-day EMA to catch up. A test of the $23.50-$24.00 level may provide us with another chance to add to the position on weakness:

$UNG STALLING ACTION

Presently, $UNG is showing an unrealized gain of 6.7% since our January 30 entry, and we will continue monitoring the price action for a potential entry point to add to the existing position.

This article is brought to you courtesy of Morpheus Trading, LLC.


Read Next



Get Free Updates

Join over 50,000 investors who get the latest news from ETFDailyNews.com!

Most Popular


From Our Partners


Explore More from ETFDailyNews.com

Free Daily Newsletter

Get daily ETF insights from our market experts. Never miss another important market development again!

ETFDailyNews.com respects your privacy.

Best ETFs

We've rated and ranked nearly 2,000 ETFs and ETNs using our proprietary SMART Grade system.

View Top Rated ETFs

Best Categories

We've ranked dozens of ETF categories based on relative performance.

Best ETF Categories