On 9/29 I suggested to “Harvest Grains” up against resistance and to be a buyer on a breakout (see post here). Grains are now working on a breakout in the chart below.
Grains are prone to huge moves and Friday was a prime example, as DBA blasted higher up to line (1). Due to these large swings in Grains, view owning this position as an aggressive one! Stops have to be wider than most ETF’s! If you are going to buy here, buy a half position and add a 10% trailing stop, because grains are up big again this morning (10/11).
Are grains acting all by themselves? Below is a 30-year chart on the CRB (Commodity) Index, reflecting an attempt to break a long-term resistance line.
Does this mean the economy is getting better? Inflation is around the corner? I will leave this debate for others. I do want to own breakouts, regardless of what the perceived message happens to be. If these breakouts continue, Emerging markets will become beneficiaries.