Morning Market Thoughts: Oil, Poultry, and Gold
Oil is continuing to reach for all time highs on a daily basis. This commodity is a trend traders dream right now, there seems to be no stopping the explosive uptrend. It has hit nearly 120.00 yesterday. Gasoline has hit an average of $3.51 a gallon. It’s very odd because the fundamental supplies do not justify this type of run away bull move. In my opinion, this move is driven by a speculative frenzy, and we will witness a dramatic pull back in the near term.
Another analyst tipped me off to an interesting correlation- oil and poultry.
What? That doesn’t make any sense, I can hear you saying. It actually makes perfect sense. As the consumer is being squeezed at the gas pump, families begin to look for cheaper, healthy foods to save money but still eat properly. Chicken is the perfect food for an economic crunch. It’s cheap, easy to prepare, and good for you. Take a look at the nice uptrend of Poultry company, Sanderson Farms
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PowerRating), and even Pilgrims Pride
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PowerRating) is bouncing off its early April lows. Remember, this is despite the rampant bird flu rumors that naturally would be holding these companies back. Is this a real, tradable correlation?
I’ll let you decide!
Our DJIA YM channel nailed a very nice down wave-yesterday. We had one false entry, then a swift 100 point down move prior to an erratic drift back up. There was plenty of time to take profits after the entry. Remember, this system’s exits are intuitive while in profits. Mechanical entries and intuitive profits exits. Please see my earlier article laying out this idea. Today, the YM channel is 12666-12793. I am flat right now, and expecting an up day today in the DJIA.
FLAT awaiting entry to trigger.
Gold has pulled back overnight, currently resting around 908. 897 is strong technical support per my analysis, let’s see what happens!
Good Luck
Dave Goodboy is Vice President of Marketing for a New York City based multi-strategy fund.