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A “Wet” Breakout 2 Years in the Making

May 10, 2024

From the Desk of Ian Culley @IanCulley

Crude oil is searching for a foothold. Copper is climbing. And Gold is clinging to its record high.

Like most of the market, raw materials are weathering the storm with varying degrees of success.

Nevertheless, today’s commodity deck includes plenty of uplifting charts – plus a trade you’ll want to take home over the weekend

Check out the Water Resources ETF $PHO posting a new all-time high:

JC discussed PHO at the start of 2022 during a Live Strategy Session.

We’ve all navigated twists and turns, picking up our fair share of gray hair. Two years later, PHO is finally moving higher.

These updated levels place the Water Resources ETF roughly 4% above our buy signal. I like raising the entry point to 65 and the target to 90. 

According to Edwards and Magee’s 3% rule (price closing 3% above a defined risk level), PHO has posted a valid breakout. 

All aboard! 

Interestingly, PHO’s holdings include a diverse set of names. 

The top three components: Ferguson PLC $FERG (Industrials), Ecolab Inc. $ECL (Materials), and Danaher Corporation $DHR (Health Care), all have their hands in water – from supplying plumbing equipment to testing water quality and protecting natural resource supplies.

It may resemble an industrial index more than a commodity ETF. But that’s OK. PHO is printing record highs in a turbulent environment, with many investors questioning which way is up.

Hop on these new all-time highs, and rest assured: If this water ETF continues to rise, so will the overall stock market.

Are you climbing aboard?


COT Heatmap Highlights

  • Commercial hedgers unwound roughly 5,000 contracts of their three-year record-long position in the Swiss franc.
  • Commercials increased their short position for copper, hitting a new three-year extreme. 
  • Commercials reduced their long exposure to corn by more than 108,000 contracts this week. 

Click here to download the All Star Charts COT Heatmap.

Trade of the Week

Today, we’re outlining Teekay Tankers $TNK, a $2.4B marine shipper:

TNK is putting the finishing touches on a massive 9-year basing pattern. 

We’re long TNK above 68.50, targeting 106.50 in the coming 3-6 months. However, a close below our risk level places us on the sidelines.

Thanks for reading.

As always, let us know what you think. We love hearing from you.

And be sure to download this week’s Commodity Report below!

Click here to download the Commodity Report Chartbook.

Allstarcharts Team



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