The Softs Review For the Week of November 28, 2011
Posted in the Day Trading Forum
“Pitguru Is Futures Trading”
Since: Jul 11
#1 Nov 28, 2011
The Softs Review
For the week of November 28, 2011
By Jurgens H. Bauer
During the holiday shortened week soft commodity prices continued to drop. And as prices drop, so has open interest, which signals that it is covering of positions fueling the drop. Cannot see any reason to expect prices to go up with economies slowing down and interest in ownership lacking. For now, besides occasional bouts of trade buying, it is doubtful that unless funds receive motivation to own long positions prices will continue to trend lower.
That being said, as you can see, the dollar is down big as traders begin the new week and all soft prices are higher. Several markets had been oversold so the possibility that prices could rebound somewhat, but only from a technical perspective was available. Any rally of that sort provides a selling opportunity as these markets are trending lower. Therefore, my read is to sell into this rally. Those who are short could cover on extreme weakness, and look to re-enter from the short side on any bounce.
Currently the long put spread in sugar is working and those premium subscribers with that recommended position should look to take any unrealized profits as was suggested on Friday, although the 120 level was not reached, and it's doubtful it'll see it today given the strength. As a whole the Soft complex looks to be trending lower. I don't adhere to the belief that the Euro is saved and we've seen the end to dollar strength. Europe's recovery move is only a part, Black Friday sales is another. Doubt that either will be sufficient to last.
The precipitous drop in cocoa prices had been screaming for a technical bounce. Had been tempted to seek a long term position, and waited till after the holiday. The drop in the British Pound helped things along. Coffee has grown so thin that it makes traders nervous and a head fake move can be violent. I remain bearish on Sugar, same with cotton.
And this quote served up from one of my readers, "Witnessing the Republicans and the Democrats bicker over the U.S. debt is like watching two drunks argue over a bar bill on the Titanic.
Disclaimer: Past performance is not indicative of future results. Trading futures and options involves substantial risk of loss and is not suitable for all investors. Fundamental factors, seasonal and weather trends, daily news, and other current events may have already been factored into the markets. The use of stop loss or contingent orders may not protect profits and may not limit losses to the amount intended. Certain market conditions make it difficult or impossible to execute such orders.
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