BBQ Trade Suggests Summer is Not Over

• Posted by Greg Harmon
• on September 7th, 2011

Summer is winding down. The Labor Day Weekend barbeques are done, the kids are back at school, and the sun is setting earlier every night. The signs are everywhere, except in the charts for food stocks. From this perspective the summer barbeque lives on and fall and winter are still on the back burner. Let me explain. The symbol of the barbeque is without a doubt the hamburger. And what is the one thing that everyone puts on their hamburger? Ketchup of course. Take a look at the charts for the iPath Dow Jones-UBS Livestock Subindex Total Return ETN, $COW, and HJ Heinz, $HNZ. The chart for $COW below shows that it has been in a summer pop up to downtrend resistance, after bottoming near Memorial day. It is now moving higher to resistance at 29.50 and

printed a bullish Marubozu candle Wednesday. Over 29.50 it has resistance higher at 30, the downtrend line, and a break through finds resistance higher at 30.50. The Relative Strength Index (RSI) is rising and the Moving Average Convergence Divergence (MACD) indicator is about to cross positive. These both support further upside. A stop can be place just under 29.00. Burgers look good. So what about Ketchup? The chart for $HNZ below also looks bullish. It ran higher to resistance at 53 on Wednesday off of a higher low. It also has a RSI that is rising and a MACD that

refuses to cross negative and is now building higher. Over 53 it has resistance higher at 54 and 54.50 before clear air. A stop can be placed at 52.20. With burgers looking good it should come as no surprise that ketchup looks good as well. So the barbeque trade is still on. But there is further evidence when you look to the chart of Campbell Soup, $CPB, the flag bearer for fall. This stock is in a bear flag, like the broad market indexes. It has a RSI that stalled after rising to the mid line and a MACD that peaked and is waning. An attempt at an early Autumn but not successful. It may move a bit higher from the current 31.65 level to the top of the flag and resistance at 32.50, but if you buy into that ride higher I would take profits and tighten stops there. Use 31.25 as a stop, which if triggered shows the flag still intact. It is not quite time for soup yet.

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