Back on July 16, 2020, Mike Paulenoff alerted MPTrader members to a potential turn in the long-term downtrend in the grains markets, reflected in his trend analysis of DBA (Invesco DB Agriculture Fund), an ETF consisting of agricultural commodities (grains, softs, and livestock).
In that changes in inflationary expectations are at the forefront of investor's considerations for the first time in decades, Mike's focus on a potential sharp climb in grains prices certainly was well-timed and well-received.
Mike wrote at the time: "DBA (Agricultural Commodity ETF) is attempting to put in a viable bottom to its relentless 11 year bear market. My attachee WEEKLY CHART shows the well defined persistent downtrend that is showing some signs of downside exhaustion, and just might be warning us that fundamental conditions in the grains market in particular could be tightening a bit... The pattern carved out by DBA since late March 2020 is worth watching. To gain any meaningful upside traction, DBA needs to chew through resistance between 13.80 and 14.10, which will point to an initial upside target zone of 15.10/30."
DBA was trading at 13.61 at the time. Fast-forward to mid-April 2021, after several intervening updates, and with DBA trading at 17.55, above his initial target zone of 15.10/30, Mike wrote:
DBA was trading at 13.61 at the time. Fast-forward to mid-April 2021, after several intervening updates, and with DBA trading at 17.55, above his initial target zone of 15.10/30, Mike wrote:
"DBA is in such a powerful uptrend pattern that I am hesitate to anticipate a peak or Double High here in the vicinity of 17.60. As long as the sharply up-sloping 17 Week MA, now at 16.77 is trailing the rising price structure, the intermediate term set up argues for higher, towards 18.30 next, and if taken out, then to 19.40/70."
Last Tuesday May 25, after intervening updates along the way from April, Mike again posted his analysis of the grains markets as depicted by DBA:
"DBA's price path continues to follow a very bullish set up off of its major low at 13.15 in June 2020. On May 14th, 2021, we discussed the likelihood that DBA had completed an initial upleg in a new bull phase, from 13.15 to 19.36 (see my attached Weekly Chart), and that my optimal target zones for a correction are 18.30 to 18.10, but if violated, then to 17.70 to 17.30.
"Since its 5/07/21 high at 19.36, DBA has corrected to 18.14 (5/24) so far, which is near the lower boundary of my first corrective target zone. Although DBA has bounced to a high of 18.42 earlier today, my pattern and momentum work still indicate that a deeper pullback is likely, into the 17.70/80 area, which is the next lower plateau from where a pivot upside reversal signal could emerge."
Although DBA closed last week at 18.59, a full 3.2% above the intra-week pullback low (but still down 4% from its May 7 high at 19.36), Mike's pattern work remains suspect about a resumption of dominant bull market strength prior to another loop down to revisit the 18.00-17.70 corrective target zone.
Join Mike and our members for their forthcoming discussions of DBA for the next directional opportunity in the resurgent agricultural commodity ETF, as well as technical and fundamental commentary about individual stocks, macro indices, ETFs, Crypto Currencies, Commodities, Precious Metals, et al.
