Beware Of The Falling Knife: GDX Technical Update
Major U.S. equity indexes have managed to hold on to gains thus far in the new year, surprising countless traders who were convinced that the “fiscal cliff” resolution rally would be short-lived. The picture isn’t entirely rosy, however, given the growing probability of a pullback on Wall Street. With no major economic data releases taking place on the homefront this week, investors will turn their focus to corporate earnings, which could serve as a harsh reminder of the sluggish economic recovery at hand [for more market news and analysis subscribe to our free newsletter].
Commodity Trading Trends: Wheat Futures Soaring
While most traders have kept their eyes glued to high profile commodities like gold and crude oil, wheat futures have been on an absolute tear. Three different kinds of wheat futures are up more than 10% in the trailing week, with standard wheat futures gaining roughly 18%. The majority of the crop is used in human consumption, ranging from cereal and bread, to pasta and even beer. Unlike corn, wheat is primarily used as food and doesn’t find its way into biofuels or livestock feed nearly as much as its yellow cousin. As a result, wheat is grown primarily to make a high quality flour for baking bread in countries around the world [see also Invest Like Jim Rogers With These Three Agriculture Stocks].
Commodity Trading Trends: Crude Oil Slipping
In the wide world of commodities, crude oil is developing an enticing downward trend. With that in mind, this fossil fuel represents a big opportunity in today’s markets, as its price has been tanking as of late. Crude has lost more than 8% of its price in the trailing five days as investors watched the fossil fuel close below $100 for the first time in recent memory. “The Energy Department said last week that U.S. crude inventories have risen to the highest level since 1990. That was followed by the Labor Department on Friday announcing the economy added only 115,000 jobs in April, far fewer than the 165,000 analysts were expecting” writes Pablo Gorondi.
Commodity Trading Trends: When To Stop Shorting Natural Gas
As natural gas has continued its massive decline, a number of investors (myself included) have hopped into short positions, allowing most to receive handsome profits in recent weeks. NG futures have been under a fair amount of pressure as this past winter was extremely mild curtailing demand for this commodity. Adding to that, new advancements in fracking have led to even greater supply, depressing prices to levels that none could have predicted. But while a short position in this commodity has yielded strong results, its outlook is beginning to turn sour, as a seasonal trend is threatening natural gas [see also Why You Should Invest In Natural Gas: The Fuel of the Future].
Commodity Trading Trends: Sugar Futures Slide
The past week was riddled with volatility as equities failed to establish any kind of meaningful pattern. With equities in disarray, commodities futures suffered, as they tend to exhibit a fair amount of volatility on their own, despite market conditions. A number of major commodities posted losses for the trailing week, as news from Europe coupled with a weak Chinese GDP report prompted some rough sell-offs. One of the hardest hit commodities came from the softs family. Sugar futures endured a bumpy week, as Sugar #11 futures lost 5.4% while #16 contracts tacked up losses of nearly 6.1% [see also 12 High-Yielding Commodities For 2012].
Commodity Trading Trends: Cotton Futures Dragging
The final month of the quarter saw a fair amount of volatility as far as commodities are concerned. With a number of global factors combining, performances were spread across the board. Cotton, in particular, had a strong March, as futures prices gained as much as 3.8% over the four week period. But as April and Q2 have begun, cotton has been struck with selling pressures. April’s losses have yielded to roughly 4%, erasing nearly all of the gains that copper futures had enjoyed in the previous month [see also Dividend Special: Top Companies In Every Major Commodity Sector].
Commodity Trading Trends: Natural Gas Still Slipping
While a number of commodities enjoyed the first quarter of the year, natural gas continued to be one of the worst performing assets in 2012. NG’s losses have now amounted to over 30% on the year, with losses of 9.4% coming in the last five days alone. As the commodity continues to hit new lows, investors and experts have been trying to call the bottom, only to watch it fall even further. Now that Spring is upon us, there is a good chance that natural gas is poised for even more losses, as warmer weather will curtail demand for NG-powered appliances, leaving high stockpiles and subsequently pushing prices into the dirt [see also 25 Ways To Invest In Natural Gas].
