WEAT ETV To Play The Future Price of Wheat
WEAT's price, an ETV which trades wheat futures, is positioned to keep increasing as the horrible war in Ukraine rages on.
I accumulated this back at the $6.5 - $7 price level as a response to the decrease in fertilizer (thank you China for hoarding and mismanaging) and increases in crop disruption due to climate change related disasters. As you can see, it was chugging along nicely within the channel I drew back in Sept. I was expecting the continuation of nice returns as I've been playing the top and bottom of the channel. I had no idea that the #1 and #5 producers of wheat would go to war before spring planting and now we can expect the price of wheat and wheat futures to sky rocket. There is supply side destruction for at least one year that is being priced in right now but the decrease in fertilizer and climate disruption effecting the rest of the producers has not. Where the market hasn't yet priced something in, there is profit to be made.
Wheat and thus WEAT's price has open skies once it breaks through the $12.65 level and the broader cup, of the cup and handle formation it has been forming for years, will be put in at $24.65, then down to put in the handle, reset and then put in a big impulsive wave up.
I accumulated this back at the $6.5 - $7 price level as a response to the decrease in fertilizer (thank you China for hoarding and mismanaging) and increases in crop disruption due to climate change related disasters. As you can see, it was chugging along nicely within the channel I drew back in Sept. I was expecting the continuation of nice returns as I've been playing the top and bottom of the channel. I had no idea that the #1 and #5 producers of wheat would go to war before spring planting and now we can expect the price of wheat and wheat futures to sky rocket. There is supply side destruction for at least one year that is being priced in right now but the decrease in fertilizer and climate disruption effecting the rest of the producers has not. Where the market hasn't yet priced something in, there is profit to be made.
Wheat and thus WEAT's price has open skies once it breaks through the $12.65 level and the broader cup, of the cup and handle formation it has been forming for years, will be put in at $24.65, then down to put in the handle, reset and then put in a big impulsive wave up.
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Traders sold at the top of the move and now everyone is getting back on the bus to continue the ride higher. I accumulated at the dip and am ready for another run.
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10.85 is first resistance, then 11.50 before a retest of 12.65. World wide fertilizer shortage compounded with the #1 and #5 producer of wheat missing the spring 2022 harvest is a strong tailwind. Mid level producers are already talking of export restrictions to meet future domestic demand. The market is pricing in a quick resolution to the war but even if that turns out, there are no producers to make up the shortfall.
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Supports - ~10.60 is new support and 9.65 is the next strong support (when the price wicked down to 9.49 it quickly found buyers). If it breaks 9.49 and holds for more than a day, price will move lower, seeking buyers at the last support below that - 9.15. If it goes down to 8.40, we need to rethink our entire trade thesis 'cause we just screwed the pooch.
I think we might range here a bit while the big funds ponderously pivot from tech to commodities but there are such strong tailwinds, with solid price action, that I am very overweight food commodities. WEAT has a low float and lots of blue sky above. Happy hunting, Good luck, and God speed.
I think we might range here a bit while the big funds ponderously pivot from tech to commodities but there are such strong tailwinds, with solid price action, that I am very overweight food commodities. WEAT has a low float and lots of blue sky above. Happy hunting, Good luck, and God speed.
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Support held at the .382 retrace. The level at which an asset finds support upon retracement tells you the strength of the current movement. If it had broken the .5 level, I would have taken profit from my 6.7 entry and waited until WEAT founds its new bottom. It didn't so I'm still in the trade.
Comment:
No love for hitting the fib lines spot on ?!? Tough crowd.
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Added to the position, it is showing a nice accumulation pattern. I have to say, this is being traded very technically which makes sense since Blackrock owns a chunk of WEAT.
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Crop reports from the US look to be bad for consumers but bullish for WEAT. There is no opening of the Ukrainian wheat supply due to Russian demand for Ukrainian defensive weapons to be dismantled around Odessa and Russia totally-meaning-it-this-time promise that they won't launch an amphibious invasion of the last port in Ukrainian hands. The Russian envoy added a pinky promise and still no deal. Shocking.
Needless to say, as the crop numbers to continue to show world wide demand outstripping supply by a significant margin, WEAT is a solid play on the start of a general commodity super cycle.
Needless to say, as the crop numbers to continue to show world wide demand outstripping supply by a significant margin, WEAT is a solid play on the start of a general commodity super cycle.
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Targets after 12.7 level is broken:
13.5 After this we have a lot of blue sky until we reach the 16 level.
Good luck and god speed!
13.5 After this we have a lot of blue sky until we reach the 16 level.
Good luck and god speed!