HardAssetsInvestor

Written by Brett Owens  |

January 24, 2011

Setting Up For A Rally In Rice?

Details

Thailand has rallied over 20% since summer—but has been chopping sideways of late (Source: StockCharts.com)

Good morning, Vietnam! Since December's breakout, we may have a nice pullback buying opportunity in front of us. (Source: StockCharts.com)

Buy The Breakouts

Most commodities tend to trend, but I've found this especially true with the ags and softs. So be patient on these trades. Whether you're buying ETFs/ETNs, futures or entire countries, these trades aren't going to get away from you until they break out to new highs.

Commodity legend William R. Gallacher discussed the importance of buying breakouts in his trading manifesto Winner Take All. Gallacher first identified a favorable fundamental setup, then waited for a price breakout to go long. The idea is as relevant today as when it was first published in 1993.

While Gallacher used only 10-day breakouts as his cue to enter a trade (and 10-day lows as a cue to sell), you can adjust and refine these according to your trading or investing style.

As we've explored here with rice, the fundamentals are on our side, so it's a matter of sitting back and waiting for the market to confirm our bullish hypothesis. And when it does—let's be ready to buy these breakouts!

If you liked this article, then check out:

• Dipping Into The Rice Bowl
• Using Grains To Diversify Your Portfolio
• Sleepy Rice Contracts Wake Up