Country Bumpkins Versus City Slickers

Wheat (using the WEAT Fund, seen on the first weekly chart, below, zoomed-out a few years) spiked in early-2022 into the teeth of the Russia/Ukraine war breaking out.

However, by May of that year the commodity had put in a lower high and subsequently sank into a multi-year drift lower. Equities, on the other hand, bottomed in May of that year (and then again in October) and subsequently melted up, overall, ever since, led by the Nasdaq and semis. 

The inverse relationship between Wheat the Nasdaq/semis fascinates me on several levels.

First and foremost, wheat is ubiquitous in the food supply and shows up in places you might not expect, such as many restaurants using wheat in dishes like soups and even omelettes as thickening agents. Traces of wheat are also found in women's lipstick and even the envelope gum (the one you lick on the back). Thus, fast and furious spikes in wheat, such as we are seeing this week, can filter through into a higher CPI print in the coming months in a fairly stealth way, given that everyone is so focused on oil. 

Beyond that, the technical inverse relationship is self-evident. Wheat and the Nasdaq seem to be quite the inverse tandem which, again, makes this week's surge in wheat all the more menacing. The WEAT weekly is, in my view, cementing the righthand side of a base bottom pattern which, in effect, should serve as a runway or launchpad higher. 

Meanwhile, the NDX (Nasdaq-100 Index) on the second weekly chart, below, is at another one of those periodic pauses where it is either basing for another move higher or actually at risk of rolling over. According to the wheat inverse relationship view, it is the latter. But you know the White House will do whatever it takes to try to talk (at a minimum) any more dips higher. 

My bet is still on the country bumpkins in the wheat fields to eventually prevail.