Soft Commodities Firming And Potentially Explosive
Keith Schneider | Oct 04, 2021 12:46AM ET
Equity markets closed negative for the month of September led by the NASDAQ 100 (-5.5%) as US markets finally broke a multi-month winning streak.
Meanwhile, the US dollar continued to outperform it peers. In fact, it appears that investors prefer it over the Chinese yuan even though the US could default on its debt obligations.
Bucking the selloff is Soft Commodities via Invesco DB Agriculture Fund (NYSE:DBA). Currently it is the most explosive looking chart if it can clear recent highs and a 5-month compression zone.
h2 The Week’s Market Highlights/h2- Risk Gauges backed off to neutral
- All four of the key US Equity indices saw oversold momentum according to Real Motion, with Dow (DIA) , NASDAQ (QQQ), and the S&P 500 (SPY) also being oversold on price
- Sentiment indicators in the SPY got oversold, but are currently mean reverting and bouncing off oversold levels
- iShares Russell 2000 ETF (NYSE:IWM) managed to close on the week in a Bullish phase
- Volume Patterns showed a neutral reading across the board, with QQQ being the weakest
- McClellan Oscillator on SPY was maintaining a neutral-to-positive level
- The Hindenburg Omen was still sending out a warning on SPY till year end
- Bonds via iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) sold off quickly, but saw a bounce from oversold levels and regained the 200-day Moving Average (DMA)
- High Yield Debt via iShares iBoxx $ High Yield Corporate Bond ETF (NYSE:HYG) was outperforming Long Bonds (TLT), a bullish indication
- Utilities via Utilities Select Sector SPDR® Fund (NYSE:XLU) continued to underperform the SPY, despite typically being used as a risk-off play
- Volatility—iPath® Series B S&P 500® VIX Short-Term Futures™ ETN (NYSE:VXX)—was continuing to consolidate and could have an explosive move if it sees a close above $30, another risk-off warning
- Value stocks via Vanguard Value Index Fund ETF Shares (NYSE:VTV) were leading both growth stocks—Vanguard Growth Index Fund ETF Shares (NYSE:VUG)—and S&P 500 (SPY) on a shorter-term basis, an indication that defensive plays were gaining strength
- Biotech—iShares Biotechnology ETF (NASDAQ:IBB)—crashed below its 200-DMA, Semiconductors—VanEck Semiconductor ETF (NASDAQ:SMH)—got hit hard losing the 50-DMA, while Regional Banks—SPDR® S&P Regional Banking ETF (NYSE:KRE)—were getting help from rising rates and closed positive for the week
- Transportation via iShares Transportation Average ETF (NYSE:IYT) also held up well on a relative basis and was looking to regain its key moving averages which would be a big positive for equities
- The Energy Sector (NYSE:XLE), Oil (NYSE:USO), and Natural Gas via United States Natural Gas Fund, LP (NYSE:UNG) were the leading sectors on the week
- The most interesting chart across the board was Soft Commodities (DBA), looking to breakout to new highs after a five-month consolidation pattern
- Gold (NYSE:GLD) may have doubled-bottomed
- Bitcoin (BTC) cleared its 50-day Moving Average (DMA) to resume its bull phase after bouncing from oversold levels
- Ethereum (ETH) also cleared its 50-DMA, looking to regain $3,650 before tackling the $4,000 level
- UniSwap (UNI) grew nearly 40% over the past 7 days as the new Chinese cryptocurrency ban forces Chinese traders to flock to more anonymous decentralized exchanges
- Avalanche (AVAX) which has grown 485% in the past 3 months and has risen to #13 by market cap was listed on Coinbase Global (NASDAQ:COIN) this past week, bringing the DeFi coin to the mainstream US market
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