Conclusion, Investment Implications, Strategy
The Teucrium Wheat ETF (WEAT is amid favorable conditions to resume its October 2020 major uptrend from Tactical support at 7.42, which WEAT has recently broken out above. A sustained rise above 7.42 would target an additional 15% rise to 9.00. This is an Asbury Momentum trade idea.
Analysis and Rationale
The Teucrium Wheat ETF (WEAT) seeks to reflect the daily changes of the price of wheat for future delivery, as measured by the Teucrium Wheat Index. The fund seeks to achieve its investment objective by investing under normal market conditions in Benchmark Component Futures Contracts. Under normal market conditions, the manager expects that 100% of the fund’s assets will be used to trade Wheat Futures Contracts and invest in cash and cash equivalents.
The rightmost green highlights in the upper panel of Chart 1 below show that WEAT is in the midst of an Oct 28th breakout higher from almost 6 months of sideways investor indecision. This breakout suggests that WEAT’s larger October 2020 major uptrend, as defined by its 200-day moving average, is resuming. Meanwhile, the green highlights in the lower panel show that WEAT also appears to be resuming its Sep 22nd trend of Strategic (63-day, quarterly) relative outperformance versus the S&P 500 (SPY) is resuming.
Combined, these conditions suggest a new Tactical buying opportunity within WEAT’s October 2020 major uptrend. A sustained rise above the 7.42 area would help to confirm this and target an additional 15% rise to 9.00.
Chart 1
Table 1 below shows that considering a $9.00 upside target and a protective stop placed below the $7.47 area, a long entry price of 7.82 would provide a 1:3.4 risk/reward ratio (risking $1.00 to make $3.40) with an initial risk of 4.5%.
Table 1
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