Still Bullish on Agriculture (DBA)

I'm back from vacation! While I was out relaxing on the ocean blue I couldn't escape from headlines about soaring commodity prices. This should come as no surprise given the federal reserve's extremely inflationary policies, and nowadays it's status quo for crude to be making new all time highs. I certainly wasn't stunned by the news that corn and soybean prices were making new all time highs after all the wet weather we've had here in the Midwest this growing season. As you may recall, I posted on the DBA chart (DBA is an etf of corn, soybeans, sugar and wheat futures) about a month ago suggesting a buy under $36 as the consolidation seemed to be wrapping up. Here's what happened:


As expected, DBA broke out of its descending triangle like clockwork just before the apex, and since then it has been going straight up. The 50-day moving average is now sloping upwards with the 200 day, and aside from being overbought in the short term (stochastics and RSI), things look really good. Before, I had been targeting the previous highs at $43.50 and I still think that will be an area of strong resistance (and a good place to take profits). However, if DBA can break through those previous all time highs, then this thing could really fly. Here's a weekly chart:


First of all, DBA expanded 80% on the last push upwards so it has a lot of momentum. Volume has been very healthy and the consolidation pattern looks just about as nice as any bullish chart could. Using the roughly $8.50 size of the recently formed base/cup, I get a target of $52 once $43.50 breaks. There's nothing to dislike about this chart if you can overcome the fact that making money off DBA means people are starving because they can't put food on their plate. Hate the game, not the players, right?

Due to the overbought nature of the daily chart, I'd try and buy/add on a pullback to around $39, but now that it's broken out, you might not get a pullback. I remain extremely bullish on DBA and it just might be my favorite long for a while. I'll be sure to let you know if things change. Of course, I still feel strongly about all four summer trades as well (long IBKR, JASO, short JWN, HD). Hope everyone is having a great summer. -py

Disclosure: I have no position in DBA