Let them eat..... wheat!

Commodities have taken a pasting in recent months, most notoriously oil, of course. One commodity that has caught my eye this week, however, is wheat.

2014 12 21 ETFS Wheat


The price of wheat this week moved through, and closed above, the moving average for the year, the ma50 (weekly candles). One of the triggers for me to open a position when trend-trading is a move through the ma50, as I feel that this represents a change in sentiment. In this case, from bearish to bullish. This is therefore possibly the beginning of a new trend. The shift in price means that wheat is now become more expensive than its average price for the year. To me this is a sign that the price may rise further. I have set my price underneath the September low, and will leave it there until the price looks like its staying above the ma50, and will then use the ma50 as a guide to setting my trailing stop each week. Of course, I may be wrong, I don't know what the future holds, so I am only risking a fixed amount on this trade, an amount that I wont lose any sleep over if the trade gets stopped out.

Back to the subject of oil. I use the US ETF US Oil (USO) to track the oil price. This week its candlestick formation was very interesting: a long legged Doji, representing indecision in the markets: the price started and finished the week at the same price, with the longer leg of the doji on the underneath, possibly suggesting that the selling during the week  had been pushed up by the buying.

2014 12 21 USO


You can see where I have gone long (bought) USO the previous week ($23.00). Is this the end of the plunge in oil prices? Look at the volume of trading in this last week - a massive increase! Are the institutions buying? I have no idea, of course. My trade of the previous week was a speculative punt and will either be justified or not over the next few weeks and months. This is definitely not a trend trade. Nor was another trade that I made this week: buying Russia. Or, more specifically Market Vectors Russia (RSX):

2014 12 21 Market Vectors Russia


The arrow shows my long entry. Russia's economy is massively oil dependent, so it could be argued that this is simply a duplication of my oil trade, and that is largely, but not completely true.  It is quite interesting to look at how RSX has performed against the US market (SPY) over the past 5 yrs (graph here). Badly, basically, very badly! But what will the next 5yrs hold in store? Which represents better value?  This could be the wisdom of a very wise trader..... but in truth it's really a gamble It certainly is not a trend trade! I wont be tracking this weekly and reporting on it in my videos weekly. Both trades have been tucked away for the long-term.

By the way, I am working on a new trading technique! I will introduce this next year. The aim of it will be to limit the items that I am trading very dramatically, in order to make it easier and much quicker for me to make my trading decisions! Of course, it will be nothing new, it is an adaptation of some existing techniques using trends in ETFs, that have been developed by other traders. I'm very excited by it and I plan to run it in parallel with my current trading techniques and see which works best for me. More of this in January.

If you want to learn more about candle-stick formations there is a good resource here: Stockcharts.com

If you want to hear and see my views on the markets this week click here (12 mins)

If you want to see how my open positions are performing, then click here: (13 mins)

I will not be trading for the next two weeks, I plan to have a good break from it and will come back to it in the New Year. Have a great Christmas and I look forward to a good 2015!



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