A Surprising Choice

Given some of the recent strength in the ag complex, one would think that the grains (corn, wheat, etc.) would be faring a bit better than they have of late. 

Still, on the back of an active and, at times, devastating hurricane season, combined with the increase in demand and widely-accepted health benefits of darker chocolate it is no wonder that the cocoa commodity is beginning to look like a longer-term bottom. 

Soft commodities have generally featured tedious, heartbreaking price action, not unlike natural gas, where very short-term trades are the default mode to be in until we see more definitive breaks one way or the other.

And while that is still the case with NIB, the ETN for cocoa seen below on the daily timeframe, the base bottom is more promising today as price peeks above the 200-day moving average for the first time in thirteen months. 

Both cocoa and avocados likely have a promising future, as old nutritional dogmas, such as the high carb/low fat religion of the last several decades, are defeated by better science illustrating that natural dietary fat, such as that seen in avocados and very dark chocolate, is not a proximate cause of western diseases, but rather excess sugar and refined grains are. Thus, cocoa makes for an intriguing commodity to watch going forward.

As for equities, we are winding down the month and quarter with another pretty good showing for bulls. Small caps, homebuilders, transports, bios, and select tech are some of the best movers.