AG Commodities….Special Situation
The widespread drought could put ag commodities in play. This would be special situation and probably short lived rally as the world monetary demand dynamics are moving towards a deleverage cleanout. We are watching the ag DBA ETF, a close above 27.10, yesterdays close was 27.00, could open the door to a 15 to 20 percent move to the 32.00 area. So far this ETF has just had a good bounce into resistance.
As to stocks, the S&P is trying to create a base at the 1310 area, an area with negligible real support but could create a little bounce, on the other-hand a close below 1300 will create a lot of psychological selling even though the real support area is at 1270. For various reasons analysts have been focusing on areas of little real technical significance, like the line in the sand recently at 1250.
The dollar is the real significant play that is looming. A close above the 23.01 level on the dollar ETF, UUP could signal a major long-term up-move with consequence to anyone with long gold positions, in fact we would be shorting gold again if that occurs.