That's Where the Wheat Is

“Why not go out on a limb? That’s where the fruit is.” -Frank Scully

More swirling headlines regarding a possible stimulus deal seem to be enough to keep stocks afloat at the moment, despite how ridiculous the whole charade seems at this point--If one were to tally, for example, how many "updated" we received from Nancy Pelosi as well as any White House staff member or Republican in Congress, it is hard to believe that the market is still going to place its trust in talk over action by now. But such is life in a bull market, where it is going to take a herculean effort by bears to eventually dampen the underlying risk appetite in this market and buy-the-dip mindset. 

In the meantime, as we take a macro look at the landscape, the omnipresent deflation versus inflation argument is circulation in the background. 

Longer-term, the progress of soft commodities like wheat, with its fund on the weekly chart, below, will be worth watching. I charted the Russia country ETF, RSX, yesterday on Twitter and for Members. Russia is one of the top three wheat (and other major commodities, of course) producers in the world. Both the RSX and WEAT seem to be on the cusp of multi-quarter upside breakouts.

Should that materialize, the inflation argument, simply put, carries much more weight regardless of conjecture about macro forces by folks on television or around the internet. 

As far as specific levels, the $6-$7 bracket on WEAT ought to suffice for an actionable range--Above $7 yields (no pun intended) an inflationary breakout while below $6 spells, in all likelihood, another bout of deflationary forces. I expect RSX to move in-line with chart going forward, too.