Blue Line Breakfast Report - Sugar Cocoa Coffee OJ - January 22
Actionable Trading Ideas that help you stay ahead of the markets
The 2nd best commodity out of the basket of 48, up 11.61% on the year. The strength in the market seems to have isolated itself from China's Coronavirus where expectations to impact demand were quickly overcome in yesterday's session. Being up 7 out of the last 9 trading days, the market now focuses on dry weather conditions in the Ivory Coast and Ghana where more than half the world's cocoa production comes from.
If you were able to get long on January 10th on a V shaped breakout at 2588, be sure to trail stops and perhaps consider using a close below today's low as your risk parameters. Support is at 2755 and the sell trigger is way down at 2588. This is my favorite chart of the year and should be printed out and taped to your wall of ideal technical setups.
The 3rd best performing commodity of the year out of the basket of 48 we actively monitor at Blue Line Futures. The 9.61% performance has been mainly due to the positive supply outlook while expectations for a global production deficit continue to expand beyond the 6-million-ton mark. I have seen new projections with the high end of the range at 9 million tons. There was an article posted on The Economic Times over the weekend indicating India's October 1 to January 15 sugar output down 26% y/y: ISMA. With India being the largest sugar producer we could just be seeing this bull camp get going. I have also seen talk over other regions output like Thailand's shrinking as well. Keep an eye on managed fund traders who are net long 77,076 contracts and continue to add to their positions.
The breakout buy signal was on January 6th at 13.73 for March sugar and your first area of support is 14.30 and sell stop triggers down at 13.50. With ADX strengthening, stochastics in overbought territory and DMI+- widening out, it might be time to tighten up the stops and protect the equity in the trade while a breakout over 14.60 would refuel the fire behind this market.
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Down 3.86% on the year and 8th worst performing commodity, trend traders were triggered into shorts back on January 13, at 95.60 for the March contract. While this downward trend might feel like it has been going on for months many traders have to ask themselves, how much farther can it go? I looked back at the weekly and saw the likely target would be from May 2019 down at 90 even. Resistance is up at 97.00 and buy triggers are at 98.65.
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The worst performing commodity of the year out of the basket of 48, down over 14.15% on the year. From a traders perspective, this market has neither triggered a long or short and is still neutral, as a sell trigger would occur with a break below 110.50 or a buy over 128.50. While I do not expect a move back over 128 anytime soon, it feels like liquidations will continue driving the market back down to 105. Options may be the best way to tackle this monster for the time being if you are going to counter trend trade otherwise ride this wave lower. Monitor rising ICE exchange stocks and managed money traders as they continue to reduce their net long positions.
Good luck and good trading,
Chief Market Strategist
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Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures; LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results