Trade Corn Not Apple

Hey traders Raghee here,

One of the things that I wanna make sure we’re keeping focused on isn’t necessarily all the gyrations that’re happening in the indices. Right now, we’re waiting to see if there’s anything the Federal Reserve is gonna do to calm the fears at the longer and shorter end of the yield curve.

There was also a lot of talk about whether or not Operation Twist would be something that would be discussed at the Wall Street Journal event today. However, so far, it looks like it’s not going to happen.

The markets have rolled over… 

The Bond market continues to strengthen. Now, within all that, there’s a lot to like in the market that has nothing to do with stocks. A lot of what I’m focused on is, at the very bottom of a one month relative performance, look back, there’s only a little that isn’t moving higher.

This is what a reflation trade looks like Gang…

I call them grocery store commodities: coffee, cocoa, oats, cotton, wheat, rice, even gas, even energies, copper — the things that make the things that we use. I’m talking about tangible things… not treasuries, not currencies, not even indices. 

I like to call them grocery store commodities.

STEP ONE: Grocery Store Commodities.

Look at the relative out performance on a one month. This is what reflation looks like, it’s the inflation of things. Now, I think inflation services and wages will probably come, but we’re seeing the inflation of the actual goods.

With that being said, we don’t have to look at where the indices are headed in order to take advantage of up trends in this market. The one that has my attention right now is Copper. 

STEP TWO: Copper pulled back fairly sharp. 

We’re taking advantage of this in the Sector Secrets Mastery that I do. The stocks have been tricky, even when we go to uncorrelated names, but the commodities have been pretty steady. This is what we’re looking for in Copper. It’s a pull back buy ideally through the 34 EMA wave. 

That’s what this is right here, a 34 EMA wave, high, close, low so I’m looking for a pullback into this area here. What I want to see is this market move higher. The last time that we did this, just to show you was back in here… 

I’m looking to do it all over again.

STEP 3: What to like about this market?

So, what I hope you see here is that there’s a lot to like about this market. It just doesn’t have  anything to do with the NASDAQ or Apple. 

Are there parts of this market that are relative outperformers? 

Absolutely, if you’re looking at strength and related to this relation trade, look at the X­L­E. Energies have been in fuego so that kind of keeps you looking at oil stocks and oil in relation to this inflation trade. So, there’s a lot of ways to look at it, but let’s stay rooted in these commodities… it’ll benefit from the current macroeconomic environment that we’re in. 

Alright, I’ll see you in the next update.

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