Yes, I live in Oklahoma on the Kansas/Oklahoma border and last year we went through a drought last summer versus this year, which has been storm after storm and rain after rain. Rain is in the forecast every day; we don’t even know what the sun looks like.
But I show you corn’s chart during the past two trading days, which saw a huge decline. [The Teucrium Corn Fund (NYSEARCA:CORN) dropped 9% during the same period.]
But it’s not just corn. Commodities from industrial metals, silver and copper are also getting hit. Copper has been coined as having its PhD in economics. If copper goes up, the economy does well. Now, clearly something is amiss there.
Then, silver is the benchmark for liquidity. Typically, silver goes up and makes new highs, versus what it’s doing right now, which is making new lows. That’s because of all of the liquidity in the system.
Then there the commodities like corn, which have to do with how different agricultural sectors are doing and can be indicative of supply and demand issues. Apparently, things are getting better so food prices are coming down.
Basically, as I’ve talked about in past updates: Are we headed into a deflationary period? That’s the debate right now because, again, there’s a huge difference between disinflation and deflation. I’m not an economist, so I don’t know. But what I can say is that by looking at all of the charts of various commodities, one after the other is going down, down, down. After currencies already got hit and the U.S. dollar is super strong, now commodities are getting hit – and that’s the pecking order.
I would be prepared for stocks to get knocked down next.
But while I call for traders to use caution when building positions in this environment, I think it’s safe to move off the sidelines. Get started with my latest bullish Trade of the Day!
InvestorPlace advisor John Lansing tracks the charts all day and offers expert technical analysis in his day trading, options and trading services: Power Trading at the Open, Parabolic Options and Trending123. For more information on which service is for you click here.