Position: Long grains (via the etn JJG)
We added a long position in soft commodities via the etn JJG in the Hedgeye Virtual Portfolio. The etn was on sale yesterday due to strength in the US dollar and a strong soybean crop report out of Brazil, and we jumped on the buying opportunity. As a reminder, commodities (measured by the CRB commodity index) have a -0.80 inverse correlation to the US dollar over the last six weeks.
We have recently been playing the softies with long positions in corn (etf CORN) and sugar (etn SGG), though here and now we prefer JJG because it has a lower beta. JJG gives you a nice mix of grain exposure with positions in the futures contracts of soybeans (39%), corn (37%), and wheat (24%). Long JJG is an excellent way to be long inflation.
JJG was added into the portfolio at $55.18. From a quantitative setup, JJG has no upside resistance and TRADE line support at $54.34 and TREND line support at $51.03, suggesting a favorable near-term risk-reward setup.