Cocoa:
First Notice: Dec: 16Nov
Options Last Trade: Nov: 05Oct; Dec: 02Nov
18Sep
Dec Support/Resistance:
2833 Oct 2011 high.
2757: +2 STD above the 21-day moving average
2705: 07Sep high.
2600: Late Jan12 peaking action
2590: Inflection level dating to 8/28.
2557: 21-day moving average
2501: 13Aug high
2366: 24Aug low.
2357: -2STD below the 21-day moving average.
2357: Rising trend line from 04June lows.
2322: 200-day moving average.
2035 area: Major support. Horizontal trend line. 12/12/11 low and 6/1 and 6/4 low.
Comment: As we noted last week, the rising 21-day moving average offered support to yesterday’s decline. However, additional weakness resulted in this level and the 2590 inflection level failing to hold the Cocoa up.
Trend, momentum, ROC and RSI all distinctly point to likely lower action. However, the Volume and Open interest seem to peaking as well. This may indicate Cocoa is coming to the end of this phase of the bull run and may be setting up for additional higher action. Watch the action if our RSI shows bottoming action.
Seasonal Snapshot: All three patterns are in a negative pattern until 19Sep.
Coffee:
First Notice: Dec:21Nov
Options Last Trade: Nov: 12Oct; Dec: 09Nov
18Sep
Dec Support/Resistance: Profit-taking was blamed for today’s sell off.
194.85: 11July high.
193.65: 200-day moving average.
191.95: 19July settlement (recent settlement high)
182.05: +2STD above the 21-day moving average.
168.30: 21-day moving average
156.55: 06Sep low.
154.60: -2STD below 21-day moving average
Comment: Yesterday, the rising +2STD Bollinger Band capped the recent rise. Additionally with the failure to make new highs and then settling materially lower, we see the market was Overbought, and we may see some consolidation at these lower levels. With no extension lower, this market sets up for another push higher.
Watch the rising 21-day moving average, which aligns with the previous set of highs before last week’s charge higher for support. If the market falls to and holds there, this gives further evidence the Coffee is poising for another leg higher.
Hedging for delivery is likely to be a cash intensive business unless some sort of long option strategy is implemented. Call or email us for information on how to implement.
Seasonal Snapshot: All 3 patterns head generally higher until month end.
Cotton:
First Notice: Oct: 24Sep; Dec: 26Nov
Options Last Trade: Oct: 14Sep; Nov: 19Oct; Dec: 09Nov
18Sep
Dec Support/Resistance (Dec):
83.04: Dec 2011 low: old support/new resistance?
82.12: 200-day moving average.
77.89: +2STD above 21-day moving average.
78.70: Rising trend line from the 19June high through 09Aug & 21Aug highs. Forms the upper boundary of a rising wedge.
77.00-77.25: Resistance range that has held since 8/9.
75.80: 21-day moving average.
75.07: Rising Trend line drawn from the 6/4 low through the 6/28 low. Forms the lower boundary of a rising wedge.
73.70: -2STD below the 21-day moving average.
Comment: Cotton rallied modestly, seemingly in the face of bearish commodity pressure AND the effects of yesterday’s Crop progress improvement. One comment that tried to nail it down was the possibility of Chinese purchases for their reserves. Other than the Middle East (Egyptian cotton) turmoil and a story about Louis Dreyfus losing one of their top cotton traders, we don’t see any other pipeline issues that would materially add a bid this market.
This markets technicals are a mixed bag. Trend and Momentum are still falling, but there is a negative shift on. RSI has risen from recent Oversold levels and is now above 50 and rising. Today’s Volume does not validate the move as it dropped.
With the exception of a brief period probing below, the Dec contract is back inside rising trend line support from the 04June lows. The case could be made for this rising trend line to form the lower boundary of a rising wedge. Bearish confirmation is needed soon, but this would project a substantial move lower. Perhaps by 20 or more cents to the low 50’s
Overhead resistance lies at the upper boundary of the rising wedge (78.70).
Seasonal Snapshot: All three patterns are in generally higher biases going into topping action in late September.
Sugar:
First Notice: Oct: 01Oct; Mar: 01Mar
Options Last Trade: Oct: 17Sep; Nov: 15Oct; Dec: 15Nov
18Sep
Oct Support/Resistance:
24.00: 23July high
22.09: 200-day moving average.
20.70: 20Aug high.
20.36: +2STD above 21-day moving average
20.50: Old resistance & where Sugar fell to & bounced for a short time in early May
19.65: 21-day moving average.
19.24: 04June low
18.94: -2 STD below 21-day moving average.
18.81: 06Sep low.
16.88: Nov 2010 low.
Comment: Today’s material negative action seems to have negated our view of a possible inverse Head & Shoulders formation. At this juncture, it appears a failure to head higher leaves us with 2 of the last 3 sessions with significant negative action on materially higher volume days. This points to a shift toward lower action ahead. Trend seems to have just topped. Momentum seems to have peaked in its acceleration and RSI is now falling and NOT Overbought. If Energies stay under pressure, look for more negative bias.
Support remains at the -2STD below the 21-day moving average.
Seasonal Snapshot: All three patterns are in a modest downward bias until mid Sep.
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