If this is truly shaping up to be a time for commodities, especially ones undervalued, then let’s expand beyond gold and silver.
Don’t get me wrong.
I see more upside in both metals.
Remember my trifecta of inflation indicators?
A. Silver to gold-has to outperform-maybe starting
B. The Dollar breaks 100-not yet
C. Sugar-has to clear 22.50 cents a pound-almost
Add to that soybeans because often we have seen silver and soybeans rally together.
Here is the soybeans price chart (below):
The daily chart on soybeans looks like a double bottom from August and now October.
In fact, if the November futures contract can clear the 50-DMA (blue), it also confirms that a double bottom is in place.
Furthermore, the momentum indicator or Real Motion is flashing a bullish divergence as the red dots are approaching the 200-DMA while the price chart shows price far away from its 200-DMA.
The leadership chart is also interesting as it shows Soybeans are about to perform on par with the S&P 500 (SPY).
Now let’s take a look at sugar. Here is the chart of sugar futures right now
I see a massive bull flag forming with a measured move slated for sugar to make a new 52-week high if the pennant of the flag breaks out to the upside or at around $.22.5 cents a pound.
Note how it is about to outperform SPY on the Leadership chart.
And by the way, gold, silver, sugar and now perhaps soybeans are all rallying with higher yields and a stronger dollar.
Imagine if that changes and yields drop while the dollar softens?
The warning for stocks that I wrote about yesterday in junk bonds HYG, sent the market lower.
However, many other voices in the room feel the same as I do: Commodities are the way to go as we end this year and into the next one.
Twitter: @marketminute
The author may have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author and do not represent the views or opinions of any other person or entity.
