Tuesday, January 4, 2011

Commodities Topping

The grain complex is overall in a very overbought condition with some classic major technical divergence at the most recent highs. A failed breakout has occurred in corn. Any further weakness in soybeans will be a failed breakout. Wheat is a bit stronger but is is still overbought. Also, sugar has formed a failed breakout. Cotton also.

This screams profit taking or selling time for grain producers (farmers, etc). Also, I think several of these markets will fall enough for shorting here to be a nice trade. Namely cotton, sugar, and soybeans. The DBA ETF would be a vehicle for this.

If this takes place then the US Dollar will likely rise and the Euro fall. Also gold and silver look to be in the last stages of a waning leg up and are ready to correct.

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