ETFs to Hedge Against Increasing Inflation

The Producer Price Index is progressive at a quick pace, with a 0.8% increase this November. For the year, producer prices are up 9.6%. As the media and market rewording the increase in prices, the stagflation narrative becomes increasingly realistic.

With that said, this gives us increasingly confirmation that commodities should be closely watched going into next year. Three ETFs we are monitoring are the Invesco Agricultural Fund (DBA) Invesco Water Res (PHO) and Teucrium Wheat (WEAT). Currently, DBA has the least value of resistance, as it's both over its 10-day moving stereotype and its 50-DMA at $19.52. Additionally, DBA's 50-DMA aligns with major support areas dating when to August, making it an interesting pick if it continues to hold over $19.50.

Moving on to water, PHO is testing its 50-DMA and looks as though it will need increasingly time to develop if unable to stay over $57.94. PHO moreover has resistance to well-spoken at $60-61 surpassing it can protract its upward trend. However, plane with resistance to clear, droughts and irregular weather patterns makes PHO an interesting space to watch through the coming year.

Then we have WEAT, which is sitting under both the 10-DMA and 50-DMA at $7.60. Recently, WEAT created a head-and-shoulders orchestration pattern and is now leaning on support from the lower neck level, as seen in the woebegone line in the whilom chart. Once WEAT can well-spoken $7.85, it will have wrenched through main resistance and can squint to reuse highs.

One thing to note is that, while these can be unconfined picks slantingly increasing inflation, our volatile market environment makes timing our entries key. Therefore, simply ownership the correct symbol is only part of a successful trading strategy.

ETF Summary

• S&P 500 (SPY): 473.54 upper to clear. 462.55 the 10-DMA hold at the moment.
• Russell 2000 (IWM): 212.71 needs to hold.
• Dow (DIA): 354.02 support.
• Nasdaq (QQQ): 385.23 50-DMA to hold.
• KRE (Regional Banks): 67.93 200-Day moving stereotype next support.
• SMH (Semiconductors): Needs to stay over 297.89.
• IYT (Transportation): Failed to get when over the 50-DMA at 267.33.
• IBB (Biotechnology): Trending lower.
• XRT (Retail): Holding on to low of range.

Forrest Crist-Ruiz

Assistant Director of Trading Research and Education