The New York Stock Exchange held its annual Tree Lighting Event this week. It was spectacular, as always.
But we're not here to talk about pine trees or LED lights. We're here to talk about commodities.
The NYSE has an array of vehicles to trade, most being equities.
They also have several commodity funds, which happen to offer asymmetric risk versus reward opportunities at current levels. Let's talk about them.
Our first setup is the Invesco DB Agriculture Fund $DBA:
The top five holdings are cocoa (14.8%), coffee (13%), live cattle (11.9%), sugar (11.6%), and corn (11.4%), several of which we've recently discussed.
As you can see, the price has carved out a similar pattern as our Soft Commodity Index, making this an excellent vehicle for broad exposure to some of the hottest futures contracts in the galaxy.
After coiling below a key level of interest for several months, the bulls are resuming the primary uptrend and printing fresh decade highs. In addition, the price has reclaimed the 61.8% retracement of the prior drawdown, giving us a clear level to define our risk against.
We only want to own $DBA above 27, with a target of 35.50 over the coming 3-6 months.
Our following setup is the Teucrium Sugar Fund $CANE
While the trade hasn't worked out for us yet, we still think sugar is a coiled spring on the cusp of making a fresh leg higher. We want to take another swing, but we're using the Teucrium Sugar Fund to express our bullish thesis this time.
We only want to own $CANE above 12.35, with a target of 14.20 over the coming 1-3 months. Over longer timeframes, we're looking at a secondary objective of 15.50.
Our final setup is the Teucrium Wheat Fund $WEAT:
The Teucrium Wheat Fund has suffered a 60% drawdown since it peaked in 2022. Today, the price is retesting a shelf of former lows from 2019-2020, giving us a well-defined level to define our risk against.
In addition, the 14-week RSI has carved out a textbook momentum divergence, highlighting a lack of selling pressure.
If wheat can stick the landing down here, we want to be long in anticipation of a countertrend rally.
We only want to own $WEAT above 4.90, with a target of 6.10 over the coming 1-3 months.
