Petricca’s Pick 12/14/2023

DOLLAR INDEX/COFFEE UPDATE

 

Significant “Episodic Volatility” occurred yesterday when the Fed kept interest rates on hold for the third consecutive meeting but strongly signaled three cuts next year.

 

After the report markets roared! Equities and Commodities rallied sharply as the U.S. Dollar fell to fresh 5-month lows.

 

Those of you that did in fact sell SHORT the U.S. Dollar Index ($104.75) when Dollar Index futures were within my UPPER 25% parameter should continue to hold. My objective is the $100.00 level or lower.

Today Dollar Index futures are trading $101.96.

 

 

While my commodity position is well documented, long metals (platinum) and Ag products….

 

My coffee position continues its upward trend and quite frankly a star of our investment portfolio. My September 6^th letter was specific recommending coffee accumulation. Please call for a re-send if you like. 312-690-7763

 

Those of you that bought coffee futures in the lower 25% of the Long-Term trading range (154.80) should continue to hold positions. Today coffee futures are trading $191.10. This move is worth approximately $14,400.00 per 1 contract.

My objective is the $230.00 level or higher which is the Upper 25% of the Long-Term trading range.

 

 

Yesterday’s Fed meeting was a game changer. In my opinion we could be on the verge of a new “Commodity Supercycle” where investors can expect Long-Term commodity gains of a similar nature and volatility to equities.

 

As economies grow, so does the demand for commodities, and eventually global demand will outstrip supply.

 

A big proponent of the current “Supercycle” talk is Goldman Sachs…

 

“The lack of investment in commodities for tomorrow is startling,” Goldman said. “Without sufficient capex to create spare supply capacity commodities will remain stuck in a state of long-run shortages, with higher and more volatile prices.”

 

While no two supercycles look the same, they all have three indicators…

 

• A surge in supply
• A surge in demand
• A surge in price

 

The new “Commodity Supercycle” could look different from previous ones for one simple reason – An increase focus on climate change.

 

According to S&P Global, a more aggressive commitment to the energy transition across G-20 nations could also create the conditions for a substantial surge where supply will decrease demand will increase and prices will move, in some cases, to record highs.

 

The chart below speaks volumes as past cycles have often been at odds with one another.

 

 

During the 1070s and the early 1980s, for example, rising oil prices led to a significant decline in stock prices as higher energy cost hurt corporate profits. In contrast, during the first half of the 2000s, low oil prices were accompanied by a strong equity bull market that ended with the stock market crash in 2008.

 

Here in 2023, we have another unique situation, a more explosive situation, if you will, as yesterday we saw equities punch out all-time highs. The U.S. economy is screaming higher. Money is flowing like water. Today that money is flowing towards commodities as commodity indexes across the board is sharply higher.

 

In order to take advantage of what could be an exciting investment cycle for commodities in the coming months I will be focusing on several markets that are still within my lower 25% parameter.

 

Please call for specifics. 312-690-7763

 

Remember there are four important components regarding my strategies…

 

1. Positions are established only in the upper or lower 25% of the Long-Term trading range.
2. Positions are established only when my trend following methodology is up or down within that 25% parameter.
3. Positions are held until positions reach the opposite extreme high or low. (The upper or lower 25% of the Long-Term trading range).
4. Correct money management strategies must be implemented.

 

There is no question that more that 90% of commodity investors lose money…

 

And it’s true that my strategies also incur drawdowns…

 

But – What I offer is a way to be “in the market” when major commodity moves occur.

 

My strategies require one to maintain –

 

• Patience
• Commitment
• Vision
• Discipline

 

Those of you that have an interest in additional details regarding my strategies should call me personally. 312-690-7763.

Would love to hear from you.

 

In the meantime,

 

Have a great year trading!

 

Best

Frank

Questions? Ask Frank Petricca today at 312-690-7763.