Agriculture/Gold

 

 

 

 

Trader Scott’s Market Blog

January 4, 2017

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The previous post about 2016 asset performance showed how wheat was once again a poor performer. Wheat is, or is one of, the biggest components of agricultural market indexes/ETFs, like RJA. It has been the biggest laggard among the main components. Agriculture in general has been a big laggard. Is it a good bet to believe once again wheat will be near the bottom of the list? Agriculture at this point is viewed with apathy. There is very little interest in it. Even within commodities there is interest in energy, base metals, and PMs, but little in agriculture. Besides uranium, there is little comparable in apathy. And of course, the related shares such as the bigger companies like POT or MOS, are way off their 2008 highs. Shorter term both POT and MOS have been trading in these ranges for the last 12 months, and they have been seeing signs of strength appear.  CF is another big fertilizer stock. SOIL is an ETF holding fertilizer companies. I am very bullish on agriculture, but have been repeating all thru 2016 to be patient about them, and to use the selling waves to buy. This year should be a much better year for agriculture. There are equities of all sizes in the agriculture sector. The ones listed are some of the bigger ones. But there are lots of smaller companies to be researched also.

The 1/6/16 post, stated agriculture would likely bottom by March, and I used RJA to begin to invest in ags back in the Spring. Inflation and commodities had major secular lows in 2016. My belief about the PMs has been December of 2015 was the secular low. And mid-late November 2016, leaking into December, would be a re-test of those lows, but at a much higher price – a secondary test, and then the first solid rally. But there would be more retesting in this first quarter. It’s great to see some miners with relative strength, but I needed to see gold itself lead the way first. And the $ plays a part in this. Before the $ has another push higher, it really needs to have a reaction. There is alot of belief in the $ now. Where in the world have those people been for the last several years? Now they’ve decided to get bullish? Our President-elect (whom I voted for) seems to have some magical powers apparently. In major bottoming/topping processes the correlations between markets gets skewed. 

I am not going to be investing in any individual agricultural commodities, only in a basket product like RJA. There are others, but they’re kind of weird frankly. But some of the individual equities are quite interesting. And if you’d like to follow some of the individual components of RJA, there are many ETFs out there now. The ETF symbols for some are WEAT, JO, SSG, BAL, CORN, and SOYB. I have no positions in any of them.

 

About

img_0074bwcrsmTrader Scott has been involved with markets for over twenty years. Initially he was an individual floor trader and member of the Midwest Stock Exchange, which then led to a much better opportunity at the Chicago Board Options Exchange. By his early 30’s, he had become very successful in markets, but a health situation caused him to back away from the grind of being a full time floor trader. During this time away from markets, Scott was completely focused on educating himself about true overall health and natural healing which remains a passion to this day. Scott returned to markets over fifteen years ago where he continues as an independent trader.



'Trader Scott’s Market Blog – Agriculture/Gold – January 4, 2017' have 11 comments

  1. January 5, 2017 @ 2:22 am Dmitrii

    IPI (intrepid potash inc) looks nice…
    http://invst.ly/30i0a

    Reply

    • January 5, 2017 @ 9:09 am traderscott

      Good one Dmitrii. Intrepidwith a selling climax and a huge sign of strength. And now a back up. A stock which is very interesting. Excellent.
      Also, as to gold – I was using $1191 as a reason in November and December – we needed a break below to begin to see the bottoming process take hold. Now it has alot of meaning again on the upside. More later.

      Reply

    • January 5, 2017 @ 10:46 am traderscott

      Great find Dmitrii on IPI. Thank you.

      Reply

  2. January 5, 2017 @ 4:54 am Aamer

    Hi scott,

    Thanks. I am already positioning myself in some of the names mentioned above…..as per the 40 year cycle work done by people I follow….there is a chance of seeing food shortages in 2017. Won’t go into the reasons here but the research is quite compelling and this cycle has been quite accurate…..and even if it is off…higher prices are on the horizon.

    I like uranium and the uranium equities have been on the move for the past few weeks now.

    My ideal scenario re markets is sitting on a beach with an email , receiving weekly performance estimates from a fund run by a certain Scott Trader. Annual investor meetings in Phuket or Las Vegas…..

    Take care ,

    Aamer

    Reply

  3. January 5, 2017 @ 9:28 am traderscott

    There are short term resistance areas coming into play in the miners. I’m going to continue to focus my buying into the backups.

    Reply

    • January 5, 2017 @ 5:23 pm David V

      Took some miners off the table today, still looking for those gaps to backfill, at $16 silver maybe the jobs report will take the air out of their souffle’?

      Reply

  4. January 5, 2017 @ 11:17 am traderscott

    I’ve been harping on this for the last 6 weeks about all of the bearishness in bonds. More new lows in bond yields today, and back below 3%. There is a very large short position in bonds. Tommorrow’s “employment” number and volatility and related short term moves aside, the consensus about clear skies ahead for the Fed to raise rates this year is going to start to be questioned. It’s another reason, besides technically, I kept mentioning the bullish unanimity in the $. Now for me, $1191 gold comes into factor. And why it’s so important as an approach to markets to suck it up and just buy into weakness when those opportunities are available.

    Reply

    • January 5, 2017 @ 6:33 pm Jon

      This looks to be a powerful impulsive move (similar to last February) with GDX blasting right through the 22-22.50 resistance today and breaking above the downtrend line from last August. So maybe a retest of the 22 area starting tomorrow or early next week. Gold is starting to lead silver and January is usually one of it’s best months. Your call for a rally this quarter with retest into summer is looking spot on!

      Reply

      • January 5, 2017 @ 8:06 pm traderscott

        Yes agreed Jon. It’s just about patience to wait for the backups to use for buying opportunities. Below the 22 area would be the first step in setting something up, along with some volatility. A close for the week above $1191 in gold would give me some more confidence of the next big retest being at a higher low. This business is only about probabilities but it would help. The stupid number is tomorrow, so who knows. The next big resistance (and buy stops) is at $1198. And so close to $1200, so they’ll shoot for taking it above there. And yes, remember my concern about silver/miners being stronger than gold in November into December. I kept saying gold needs to be leading, so silver/miners showing relative strength was actually concerning me. And it just led to even more selling. So now it is good to see gold take control here.

        Reply


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