There's far too much bullishness in the marketplace! The bullish consensus numbers must be off the charts. Times like this create opportunity for astute traders and losing trades for those that are not. My readers know I track the CCI index closely. There are some disturbing technical developments taking place right now! The index has entered an area of tremendous resistance. Remember, markets as a rule do not go straight up or straight down. The trend is your friend. We want to buy the weakness of the strength and sell the strength of the weakness. If you would like further explanation I would be more than happy to clarify. I can be reached at 800 611 6974. 

Coffee 10/15/2009

Life Time Trading Range 41.50 Cents - $337.50 per Pound

Trades on The ICE 2:30 AM - 1 PM CDT

Coffee has been a stellar performer so far this week. Apparent strength in the global economy has created a euphoric environment where just about every product is being viewed as an inflation hedge. The dollar has been heading lower and just about everything else on earth moving higher - coffee, sewer covers and saddle shoes included. I cannot help but stress that now is a time to trade very cautiously. The market has become somewhat overbought as it approaches the highs of August. The 140 area is a formidable barrier of resistance. Although the market has moved higher, an assortment of short term technical indicators have not. This has created bearish divergence; not a good sign for coffee bulls. Please do not misunderstand. Rising open interest, plans by Brazil to purchase additional coffee for storage and the continuing trend of decreasing exchange stocks should add to bullish undertones. On the flip side, the Brazilian flowering season is upon us. A good flowering could bring a bumper crop next harvest and provide resistance to higher prices. The long term trend is up but the market may need some backing and filling action before resuming its upward trek.

Do not trade without protective strategies such as stops and or options. 

Trade recommendations:

Buy Dec futures at 129.00.  Stop at 127.00.  1st objective is 136.00.  2nd objective is 142.00.

Bill Gordon, bgordon@alaron.com, 800 934 6493.

 

Cocoa 10/15/2009

Life Time Trading Range $444 - $5379 per Tonne

Trades on The ICE 3 AM - 1 PM CDT

Here we have another market directly affected by improving macroeconomic conditions. The market has recovered nicely from its two day correction of 279 points. The majority of fundamental news has been negative, but the market has been holding its ground. Greater than expected cocoa bean arrivals at Ivory Coast ports, and news of higher crop estimates from Indonesia and Ghana have been all but ignored. Third quarter U.S. grind data is due to be released today at 3 PM CDT. Traders are looking for a slightly higher to lower number. If the U.S. dollar continues to break down, commodity markets should continue to rally. Speculator funds will snap up cocoa if it were to show much in the way of weakness. The way this market is behaving, it would not surprise me to see cocoa at much higher prices six months from now.

Do not trade without protective strategies such as stops and or options. 

Trade recommendations:

Stopped out of COZ9 .  In at 31.65, out at 3090 on 10/12/09

Long Jan call at 21 on 10/12/09.

Bill Gordon, bgordon@pfgbest.com, 800 935 6493

Sugar 10/15/2009

Life Time Trading Range 2.30 Cents - 66.00 Cents per Pound

Trades on The ICE 2:30 AM - 1 PM CDT

Sugar has recovered close to 50% of its recent 425 point break. A possible double top makes itself known the daily sugar chart. The weekly chart displays a choppy range trade between the 20 cent to 24 cent price area with a single weekly stab to 24.85.This range has existed for two months now. The 25 cent area is a major resistance level that is both technical and psychological in nature. Again, we have wet weather in Brazil hampering the harvest. Slowing of the harvest could supply some support to present sugar prices. On the other hand, Pakistan may not need to import as much sugar in the future as previously thought. The Pakistani outlook for the 2009/10 crop has been ratcheted upwards by one half million tonnes; this is exactly one half million tons higher than the previous estimate.

Do not trade without protective strategies such as stops and or options.

Cotton 10/15/2009

Life Time Trading Range $26.84 - $117.20 per Pound

Trades on The ICE 8 PM - 1:30 PM CDT (Next Day)

Cotton - how can something so soft to the touch be so difficult to trade? Cotton is an industrial commodity. A strong economy equals high cotton prices and vice versa. The bullish economic environment has assisted cotton to rally sharply over the last month, and presently, it's up over 600 points this week. 70.50 equals a 61.8% retracement of the break in cotton during the massive deleveraging of 2008 - 2009. As I write this, today's high is 69.49.

The cotton contract traded on The Ice is U.S. production. Cotton competes with soybeans for planting acreage; both can be grown in the same conditions. This is especially apparent in the Mississippi delta region. When soybean prices are high, less cotton is planted.

Rainy weather in the Mississippi delta has let up and harvest activity is again beginning. It is a concern that open boles suffered damage from the rains. Time will tell. Harvesting time this growing season has been the slowest in many a year. The weekly crop progress report last Tuesday showed the harvest at just 12% harvested compared to the 33% average over the last ten years!

Do not trade without protective strategies such as stops and or options.