Soybeans, as represented by the Teucrium Soybean Fund, have been in a declining trend for most of the past 7 years, having remained predominately below the Blue Line over that time. This declining trend, however, may be changing.
As can be seen at the bottom right-hand side of the chart, soybeans, as represented by the Teucrium Soybean Fund, have broken out sharply this year, rising substantially above the Blue Line. If price remains above the Blue Line on any future price corrections, this may be one of several indicators warning of higher food prices to come.
Chart courtesy of StockCharts.com
Other commodities that are exhibiting similar, but not necessarily the same pattern, include corn, wheat, and coffee.
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BLUE LINE INVESTING® (BLI) is an actively managed investment process that pursues our mission by combining a trend following investment philosophy and a “buy low, sell high” investment strategy. Our mission is to grow our client’s financial wealth over a full market cycle in a risk-managed and tax-efficient way.
We monitor the relationship between price and the Blue Line over time to help identify which stock markets worldwide are experiencing rising, sideways, and declining primary trends. We prefer to invest in those markets experiencing rising or sideways primary trends, while avoiding those markets experiencing declining primary trends. The Blue Line helps us identify these trends, and when changes may be taking place.
Technical analysis is a method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volumes. Technical analysis attempts to predict a future stock price or direction based on market trends. The assumption is that the market follows discernible patterns and if these patterns can be identified then a prediction can be made. The risk is that markets may not always follow patterns. There are certain limitations to technical analysis research, such as the calculation results being impacted by changes in security price during periods of market volatility. Technical analysis is one of many indicators that may be used to analyze market data for investing purposes and should not be considered a guaranteed prediction of market activity. The opinions expressed are those of BLI. The opinions referenced are as of the date of publication and are subject to change without notice. BLI reserves the right to modify its current investment strategies based on changing market dynamics or client needs.
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