From Dana Lyons: After sprouting past key resistance earlier in the month, grain prices are testing their breakout levels — is this the buying opportunity bulls have been waiting for?
Grain prices have been in a drought (figuratively speaking) for the better part of a decade. In early July, we noted a seemingly key breakout in the beleaguered complex. Specifically, the S&P GSCI Grain Index had broken out above its post-2014 Down trendline, potentially opening up more considerable upside for the index, finally. That said, as we noted in a Premium Post at The Lyons Share, “on a short-term basis, it has probably gotten a little ahead of itself and we’d wait for a bit of a pullback before pulling the trigger.” Now may be time for investors to pull that trigger.
That is because, following a pullback over the past few weeks, the Grain Index is back testing the top side of that broken trendline.
On the theory that former resistance *should* become support, this may be a nice entry point for grain bulls, from a risk/reward standpoint. Yes, this is mere isolated data point in a market with a complicated set of price influences. However, as we noted in that Premium Post, there may be other factors going for grains here as well.
In a new Premium Post at The Lyons Share, we review those other factors, revisit our favorite of the individual grain markets and lay out how to play this potential opportunity.
The PowerShares DB Agriculture Fund (NYSE:DBA) was unchanged in premarket trading Wednesday. Year-to-date, DBA has declined -2.15%, versus a 11.71% rise in the benchmark S&P 500 index during the same period.
If you want the “all-access” version of our charts and research, we invite you to check out our new site, The Lyons Share.
Disclaimer: JLFMI’s actual investment decisions are based on our proprietary models. The conclusions based on the study in this letter may or may not be consistent with JLFMI’s actual investment posture at any given time. Additionally, the commentary provided here is for informational purposes only and should not be taken as a recommendation to invest in any specific securities or according to any specific methodologies. Proper due diligence should be performed before investing in any investment vehicle. There is a risk of loss involved in all investments.
This article is brought to you courtesy of Dana Lyons, JLFMI and My401kPro.