After A False Breakout, The Agriculture Sector Looks To Finally Bottom

Share This Article
April 9, 2017 6:37am NYSE:DBA

agriculture 600X300

From Taki Tsaklanos: Agricultural markets looked very bullish in February when we wrote 3 reasons why agricultural commodities could start a new bull market. Interestingly, since then, they did break out only to retrace in March. 


Early April, the agricultural index GKX (see chart) is back in its bearish area.

As a reminder, the agricultural commodities that are part of the GKX index are Wheat, Corn, Sugar, Soybean, Coffee, Cocoa, Cotton.

This is a classic case of a false breakout. Things looked quite bullish after the breakout though.

Comparing the 2016 false breakout (see purple circle at 330 points on the chart) with the one in March, it is clear that the recent one looked much more solid. Still, the breakout did not hold.

Right now, the agricultural index is just 2 percent away from a major support area. The 280 level in GKX has held for +20 months. It is imperative for the sector to successfully overcome this test, otherwise agricultural stocks will go much lower in 2017.

This case also proves that investors need to stay alert, in all circumstances, no matter how bullish or bearish things look.

In closing, we want to note that our selection of 3 agriculture and potash stocks should also be monitored closely for breakdowns. In particular, Potash Corp is going through an important test. Investors better be alert on what is happening in the agriculture space and in Potash Corp in particular.

agricultural markets

The PowerShares DB Agriculture Fund (NYSE:DBA) closed at $19.58 on Friday, up $0.02 (+0.10%). Year-to-date, DBA has declined -1.95%, versus a 5.22% rise in the benchmark S&P 500 index during the same period.

DBA currently has an ETF Daily News SMART Grade of C (Neutral), and is ranked #59 of 126 ETFs in the Commodity ETFs category.


This article is brought to you courtesy of Investing Haven.


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