Anthony Speciale Stock Market Analyst

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Is This Key Commodity Index Starting to Break Down?

The Invesco DB Commodity Index Tracking Fund is starting to exhibit a trend correction that is identifiable and notable.

The Invesco DB Commodity Index Tracking Fund (DBC) is starting to exhibit weakness.

While this is likely just a trend correction, it is identifiable and notable.

Therefore, I want to share my findings with you today.

We’ve seen a run up in commodities during the past few years like none other.

And we haven’t just seen it in the market… We see it everywhere we spend money these days.

Unfortunately, it’s likely not to get better anytime soon.

Why do I say that? Well, for a few reasons…

Commodity Chaos

First, the geopolitical tension surrounding Russia invading Ukraine doesn’t help…

Second, the surrendering of our nation’s energy independence doesn’t help…

And of course, the fact that our supply chain has been disrupted also doesn’t help…

You see, Ukraine plays a vital role in the world’s marketplace for corn and wheat. Both are publicly traded on the commodities markets.

In the midst of a Russian invasion, Ukraine likely isn’t tending to the crops currently planted nor is it focused on the harvest.

If the current crop isn’t maintained and harvested and if the soil isn’t prepared for the next planting season, we could experience a global food shortage.

Something similar could happen in the energy market, as the world is dependent on a significant percentage of raw crude extracted from Russia as well.

Since the war has started, much of the world doesn’t want to do business with Russia anymore. But it may not be that simple.

The Technical Picture

As noted above, I follow an exchange-traded fund (ETF) called the Invesco DB Commodity Index Tracking Fund (DBC), which tracks the commodities market as a whole.

It’s a great benchmark, and the ETF remains in an identifiable uptrend.

However, a short opportunity has just been triggered, as there’s a bit of weakness pressuring this market at the moment.

Keep in mind that as an asset trades to new all-time highs, there is bound to be large position profit-taking eventually.

And that’s what I believe is happening currently…

As long as price action continues to settle below the ascending orange channel that has recently been penetrated, it could easily test the ascending teal channel below.

Weekly Chart of Invesco DB Commodity Index Tracking Fund (DBC) – Source: TradingView

I’ve identified an entry, stop loss and target on the weekly chart above.

However, the target is way too small in comparison to the stop loss, so it’s not a wise trade idea in this time frame.

But for the shorter-term trader, this could prove to be most useful, which is why I wanted to share this today!

Get Josh’s Take

My good friend and professional trader Josh Martinez uses a similar technical approach to the markets inside of his entry level futures trading service, Futures War Room.

Josh is one of the greatest futures traders I know. We often bounce ideas off of each other as we analyze the market.

He describes his futures trading strategy as possibly “the world’s most profitable side job”…

This strategy helped Josh turn an initial deposit investment of $500 into $39,282 in less than two years.

All you have to do is access a little-known portal in your brokerage account and start copying Josh’s strategy — step by step, and trade by trade.

It really is that simple.

If you’re interested in learning more and how you can take on the futures markets with technical analysis, consider checking out his latest presentation right here!

Rules to Live By

“Just because you can doesn’t mean you should.” Sherrilyn Kenyon

Until next time, I wish you a beautiful and blessed day!

Yours In Trading Success,

Anthony Speciale Jr.

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