As the major stock indexes continue to weaken, US factories saw their orders rise 1.2% in August.
This shows that even though stocks are struggling, demand for goods is stable.
Therefore, now is the time to pay close attention to spaces that are resisting as the general market shrinks.
This brings us to food and energy products.
Although we have traded commodities with stocks throughout the year, their current strength makes them even more attractive as they offer safer plays that are currently countering the market.
However, even if the market changes direction, the demand for goods continues to increase and therefore commodities have the potential to rise in both market scenarios.
Three commodity-based ETFs that we monitor are:
Starting with the MAS, it recently cleared its 50-day moving average to $ 20.17.
If 20.17 can hold as new support area, we can wait for the MAS to return to its highs near $ 23.
Another soft commodity that has seen a huge run is the CANE.
CANE could prepare for trade if it continues to hold the 50-DMA at $ 9.32 as support.
Because sugar has gone through a period of consolidation, it has the potential to take a big step forward if it steps out of its current range.
Turning to energy, oil has recently gained momentum.
However, unlike CORN and CANE, it has yet to hit its 2020 highs.
Currently, oil supplies are limited by OPEC, which has been careful not to over-saturate the oil market since the crash.
That said, USO was trading above $ 100 at the start of 2020 and still has a lot of room for improvement.
Therefore, we should keep these three ETFs on our watch list and continue to explore the commodities space while the general market is struggling.
Analysis and summary of stock ETF trading
S&P 500 (SPY) Sitting in a minor support area. Need to hold recent low at 426.
Russell 2000 (IWM) 225 resistance zone. Keep within reach. Support 217.
Dow (DIA) 334.13 next main support area.
Nasdaq (QQQ) Look for support.
KRE (Regional banks) 67 support zone. 70 resistance.
SMH (Semiconductors) 247.67 support zone.
IYT (Transport) 250 resistance.
The author may have a position in the titles mentioned at the time of publication. All opinions expressed here are solely those of the author and do not represent the views or opinions of any other person or entity.