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This Quiet Bull Market Is About to Break Out

By Jeff Clark
Tuesday, February 11, 2014

Commodity bulls are going to make a lot of money this year.
 
Agricultural commodity prices have fallen hard over the past three years. Some of them are down as much as 70% from their 2011 highs.
 
But that trend is reversing in 2014. Prices have bounced off the bottom... And many commodities are on the verge of breaking out into new uptrends.
 
It started last month with coffee...
 
coffee price per pound chart
 
The price of coffee bottomed at $1.00 last November. It hit $1.45 last week. That's the first target price we pointed out when coffee broke out in January. And it's a 45% increase in just three months.
 
Other commodities are starting to show the same sort of potential. Look at this chart of the PowerShares Agricultural Commodity Fund (DBA) – an exchange-traded fund made up of 17 different agricultural commodities...
 
DBA share price chart
 
DBA has broken out to the upside of a long-term falling-wedge pattern (the blue lines). It's approaching its first resistance level at about $25.70. That's a logical place for the price to pull back a bit after such an extended move higher.
 
Traders should use any decline back down toward the breakout point of the wedge at $24.50 as a chance to buy. A breakout move from this sort of long-term wedge pattern often signals the reversal of a bearish trend into a bullish trend. And it usually leads to much higher prices.
 
Over time, DBA should approach its 2013 high near $28 per share. It may even challenge its 2012 high at the top of the chart, just above $30.50 per share.
 
Agricultural commodities have quietly kicked off a bull market this year. Traders should be looking to buy on any pullbacks.
 
Best regards and good trading,
 
Jeff Clark




Further Reading:

Last week, Jeff showed readers why he's bullish on another commodity trade... gold stocks. "Gold stocks are nearly as cheap – relative to gold – as they were at the start of the gold bull market in 2001." Get all the details here: This Chart Shows Why You Should Own Gold Stocks Today.
 
Matt Badiali also thinks now is a good time to buy gold stocks. But he says to make sure you buy the right gold stocks... "If you buy the wrong ones, you could still lose a lot of money." Learn which big gold producers you should avoid here and here.

In The Daily Crux
Market Notes
Gold-stock uptrend continues as sector fund GDX breaks out to a two-month high.
 
Medical-device giant Stryker soars to a new all-time high.
 
Biotech fund IBB tops a short list of funds up 100%-plus over the past two years.
 
Building-materials companies are riding the housing recovery... USG (drywall) and Texas Industries (cement) jump to multiyear highs.
Market Watch
Symbol Price
Change
52-Wk
S&P 500 1799.84 +0.2% +18.6%
Oil (USO) 35.64 +0.0% +2.7%
Gold (GLD) 122.92 +0.6% -23.9%
Silver (SLV) 19.29 +0.1% -36.6%
U.S. Dollar 80.65 +0.0% +0.5%
Euro 1.36 -0.3% +1.8%
Volatility (^VIX) 15.26 -0.2% +17.2%
Gold Stocks (^HUI) 225.40 +3.1% -44.1%
10-Year Yield 2.68 +0.4% +37.4%

World ETFs
Symbol Price
Change
52-Wk
USA (SPY) 180.01 +0.2% +21.0%
Israel (ISL) 16.57 +0.4% +20.2%
Japan (EWJ) 11.38 -0.5% +14.7%
Taiwan (EWT) 13.55 -0.8% +2.1%
S. Korea (EWY) 58.96 -0.4% +0.4%
Canada (EWC) 28.35 +0.0% -0.8%
India (IFN) 19.66 -0.7% -4.4%
Singapore (EWS) 12.29 -0.8% -9.3%
Russia (TRF) 13.95 -0.9% -10.2%
China (FXI) 34.10 -0.9% -11.7%
S. Africa (EZA) 57.66 -1.1% -12.8%
Lat.America (ILF) 33.51 -1.2% -23.0%

Sector ETFs
Symbol Price
Change
52-Wk
Biotech (PBE) 42.34 +1.4% +70.0%
Alt. Energy (PBW) 6.54 +1.9% +48.3%
Defense (PPA) 31.01 -0.6% +44.2%
Media (PBS) 25.19 -0.2% +43.8%
Health Care (IYH) 120.15 +1.0% +34.1%
Big Tech (QQQQ) 87.80 +0.6% +30.7%
Consumer Svcs (IYC) 117.71 -0.1% +27.4%
Software (PSJ) 35.89 -0.2% +25.5%
Nanotech (PXN) 8.02 +1.3% +24.8%
Industrials (IYJ) 96.97 -0.5% +24.5%
Transportation (IYT) 128.40 -0.9% +23.4%
Semis (PSI) 18.55 +0.7% +22.4%
Financials (IYF) 78.35 +0.0% +21.4%
Retail (PMR) 31.26 -0.2% +19.0%
Insurance (PIC) 19.01 +0.1% +18.3%
Telecom (IYZ) 28.41 -0.3% +16.7%
Construction (PKB) 21.83 -0.3% +15.9%
Water (PHO) 25.55 -0.3% +15.3%
Basic Mat (IYM) 78.82 +0.4% +11.7%
Utilities (XLU) 39.18 +0.8% +11.0%
Real Estate (IYR) 66.47 +0.9% +1.4%

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