The Softs Pit Review
For the week of October 4th, 2010
We are going to view the soft review for this week. Just check out what our expert - PitGuru Jurgens H. Bauer - would like to share with us!
It was apparent that funds were involved in liquidating positions late last week. Mostly this seemed focused in Sugar and Cotton, but Coffee and Cocoa saw some too. After the damage done to the charts in cocoa on Friday when the market rallied and failed, following Thursday’s move, it looks like CCZ needs to get back over 2900 to look good again. And here I was getting excited about the long side. Well, I own some CCZ calls and may have a decision to make. I still believe cocoa has something in it on the upside, but it looks awful. I also wonder if Friday's action had anything to do with the November options expiring.
Cotton prices needed a correction and ought to retreat to 96 cents to test support. If it doesn't find it, then 90-88 cents isn't out of the question. Remember this market has risen over 30 cents this summer. On the upside, 105-106 is resistance, and shorts will likely use new highs as a spot to house protective stops. Fundamentally crop report will come out, but not much new to report, exports have been superior, much is up to the funds holding longs.
Sugar looks as though it has established a top and is headed lower. Although I have not yet gotten short it may be appropriate to sell into any strength, if we see any...
As for Coffee....November option expiration comes this Friday. Regular readers know I have been holding onto an objective, but it doesn't seem likely this week. Long term I remain friendly as fundamentals continue to portray that there will be a tight supply demand structure, but the way this market treats long term positions means you often get shaken on sharp moves. A sustained drop below support at 177-178 could get ugly. But that is where I view support. It’s there already this morning. If it closes below there a few times and 168-165 comes into play....maybe even lower.
In closing it is worth mentioning that the dollar weakness may cause politicians to take action. Normally, heading into an election we see those seeking re-election touting their accomplishments, but the current (and dare I say soon to be former) congress may do some things that could prove short sighted. Check out the daily price report for more supports in your trading: cftcwheat.com |
