The 26-wk T-Bill Is Now Offering 5.03%

I’m no yield-curve guru able to forecast from the tea leaves of interest-rates where stock prices might go next. But I do know --or at least have been told multiple times by credible analysts-- that rising interest-rates are Not A Good Thing For Stock Prices. OTOH, they can be A Good Thing for commodity prices, as traders/investors rotate into hard assets to protect against inflation.

Info on recent Treasury auction results can be found here. Announcements, Data & Results — TreasuryDirect. How to invest in commodities and commodity producers can be found dozens of places. Trying to use futures to trade commodities is a hassle due to the need to pay exchange fees and data fees and the need to actually know what you’re doing. (LOL) But "breakfast’ could be traded pretty easily with these EFTs: WEAT, CORN, NIB (cocoa), JO, CANE, and COW.

One caution. With the exception of those that track oil, nat gas, gold, and silver, most of the ETFs that track commodities are very thinly traded. But that’s not a disadvantage if you’re trying to profit from fundamentals --i.e., be an ‘investor’-- rather than from just technicals. If you want a good enough template for generating signals, as well as for setting stop values, take a look at this chart template.

BarChart’s default parameters for the ‘SuperTrend’ indicator are (7,3). The first value is the lookback period. (Essentially, the period of the MA that creates a signal line which prices cross. If ‘price’ has moved from below to above the line plotted by SuperTrend, you’ve got a ‘Buy’ signal. (The opposite for a ‘Sell’ signal. But more on this later.)

The second value is a ‘multiplier’ that moves the MA away from the plot that would be --in effect-- a 1-period, SMA. Some quick charting shows that the value needs to be reduced. ‘1’ is a good guess in the absence of a lot of backtesting.

The second panel in the chart isn’t needed (or could be any of a dozen other indicators). But it’s colorful, and I like colorful charts. BarChart’s default value for the ‘Distance from Average’ indictor is 200. That can work fine if you want to filter out a lot of noise and want to jump onto trends when only they are well-established. The downside of that tactic is that you’d be late getting out, not that there aren’t workarounds, such running a pair of DIFAs, each with a different parameter. But a compromise solution is to run a single instance and to lower its value. Something around ‘50’ does a decent job. (But that would need to be backtested, 'natch.)

Nobody but a trading obsessed-retiree would want to be on a screen all day, watching prices and making adjustments. (Nah. I wouldn’t know anyone who fits that description.) Most of us want have a life apart from markets, but would like to capture some of the profits made possible from price fluctuations, all the while avoiding the losses that can come from those same price fluctuations. The time-honored, practice-tested solution is to set profit targets and cut-loss points every time a new position is entered. If your broker doesn’t provide a means to trail stops, the stops are going to have to be reset each day, which isn’t a biggie. But guessing at good value might be a hassle. Wm O’Neil advises using 8%. Weinstein says stop values should be taken from the chart’s structure, especially from perceived areas of Support and Resistance. A compromise solution might be to run a second instance of DIFA with a widened parameter, which is the blue line in the chart. (I guesed a value of 1.5 might do a good job. But that would have to be backtrested, of course.)

Now we get to specifics:

(1) Only ‘Buy’ when DIFA has turned from ‘red’ to ‘green’ AND ‘price’ has closed above the green line of SuperTrend.

(2) But get out if any of the following conditions occur:

(a) The chart turns ‘ugly’. (If you do a lot of charting, you’ll develop a feel for this.)
(b) If ‘price’ closes below the red line of SuperTrend.
(c) If DIFA turns from ‘green’ to ‘red’.

If you’re trailing a stop, because you don’t want to be in front of a computer all day, then there’s nothing to do. Your postion will get carried forward, or you’ll get kicked out automagically and unemotionally.

Here’s a nice instance where the rule requiring two postive conditions before you have a valid ‘Buy’ signal would prevent you from getting cut by “a falling knife”, but still allow some judicious bottom-fishing.

But the really traderly way to trade this chart would be with a buy-stop set at Resistance, indicated --in this instance-- by the value of the blue line.