Blue Line Breakfast Report - Sugar Cocoa Coffee OJ - January 24
The 2nd best commodity out of the basket of 48 we monitor at Blue Line Futures and up over 9% on the year. Cocoa continues to slide lower weighed in by weaker global equity markets and currencies. With Asian equity markets affected by the Coronavirus and the situation remaining uncertain I would expect long liquidation to continue. The one bullish development we need to keep an eye on is the hot dry weather in the West African growing region.
If you were able to get long on January 10th with the V shaped breakout at 2588 you might want to ratchet up your stops to protect your position. Remember as a rule of thumb try and protect 70% of your open trade equity at all times. While sell triggers come in at 2615, we closed out many of our longs over the past 4 sessions. If you did not get involved in this move from the start and want to counter trend trade, I believe you are a bit early, however consider just buying outright put options as a trading vehicle. If the market collapses volatility will explode and if you are wrong it should be a slower loss of equity.
Overtaken by the OATS market!!!
Now the 4th best performing commodity of the year out of the basket of 48 but it is also another market going through a correction. The reversal on the charts should pick up steam as open interest has pushed to the top end of my charts and average true range has nearly doubled since the start of the year. There is still a threat to global supply however the recent sell off in the energy market should weigh in on the price.
The buy side breakout signal was on January 6th at 13.73 for March sugar and your first area of support is 14.40 while sell stop triggers are down at 13.64. With ADX strengthening, stochastics in overbought territory and DMI+- widening out, it’s time to tighten up the stops and protect the equity in the trade.
Down 3.61% on the year and 10th worst performing commodity, trend traders were triggered into shorts back on January 13, at 95.60 for the March contract while resistance still is up at 97.25. If OJ can break this resistance level a rally back up to 104.80 is possible.
The worst performing commodity of the year down about 15% on the year. The market failed to hold yesterday's rally and it looks like the likely target to the downside is the 200 DMA. ICE exchange coffee stocks continue to rise and with the Coronavirus spreading, I expect continued pressure in the market.
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