Jurgens Bauer's Comments on the Soft Commodity Markets for 06.18.08
Coffee: Pinch me...prices were up two days in a row...Otherwise not much new to report on. Prices firmed in early electronic trading and briefly took a drop once options opened, but then it was a quiet and dull crablike session for the most part as values traded in a narrow range and moved sideways. Close to 1:00EST and with a little more than a half an hour left before options closed a late high of 141.95 was reached, with September closing at 141.75.
For whatever reason (and I'm not so sure myself) I have begun to be partial to coffee and now have somewhat of a long side bias. The swift recovery from the lows (made when some size imbalance was done), causing a dip to138.05 basis Sep offered to verify my bias. However, I still own downside disaster puts (just in case), but it seems all they ever do is go down in value regardless of where prices go. Looking for a move that tests the high end of the range soon and will follow the subsequent action, if it fails, I'll be leery of getting too short, but if it rallies a nice move of 5 cents should follow. Volatility on the upside in Sep and Dec seems lofty, maybe because there aren't many willing sellers. (Another sign of Weather Market)
Cocoa: Got on the sidelines last Friday, not trusting that another major push was in the works. I'm itching to try the short side, but a drop is needed to scare longs, who now have deep profits. A move down below 298 and especially one below 2950 might do the trick and trigger the dumping of large amounts of mature longs and thus drive prices low enough to chase more longs and attract shorts. I think that such a move may happen. You know one of those quick 100-200 point drops cocoa is so famous for. Why not? There hasn't been any bullish news out in a while, only rumors of crop problems. While a correction might prove healthy for this bull market, (it is a bit overbought), continued failure to move above 3040 may be a signal.
Sugar: Believe it or not I continue to look for a place to try the short side of this market even as the trend appears to have shifted upward. My reasoning is I can see no fundamental changes. The technical pattern however does suggest that October may have a little more to run on the upside, but far too many traders have taken on long positions in too short a time with no real reason to do so. So, now that there has been some "self-fulfilling" technical support for their bullish contention a serious pressing could cause a spec washout. So as you can see I have my doubts that this move up can continue much longer.
As long as Oct manages to stave off any move below 12.10, the trend may be look friendly, but I need to be convinced by seeing a close above 12.80 and maybe even 13.20 before I will admit that the short side up here is the wrong side.
Cotton: Needed a rest and got one. The early dip to 8085 held well and resulted in a climb to the highs once options opened and more call buying emerged. Then things began to falter. I do not think the wheels are falling off this bullish wagon, simply that a test to see what kind of support is behind it was needed. The day saw Dec hold 8115 several times, but unable to muster a move back above 8170. What is really needed is a move back above 8235, especially a close.
And bullish as I am this market may now be vulnerable on the downside in a test for support, in particular this holds true as we approach FND (First Notice Day). There has been a lack of willing and aggressive selling in options which has resulted in premiums sky rocketing. If this thing is real the best plays might be to buy call spreads and hold on. There ought to be support on dips, but Dec needs to prove able to hold and move back above 82.50.
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Trading floor: (212) 748-3898, cell: (973) 652-4694
Email me at jurgensb@gmail.com
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Jurgens' Technical Support and Resistance Levels for 06.18.08
Dec Cotton: (80.95 -1.29)
Support: 80.50, 80.15,
Resistance: 81.15, 81.50-81.70, 82.35, 83.50-84.00
Sep Coffee: (141.75 +3.05)
Support: 137.60, 135.05-134.50,
Resistance: 142, 143.90-144.50
Oct Sugar: (12.43 +0.16)
Support: 12.10-11.98, 11.86-11.60
Resistance: 12.45-12.50, 12.68-12.83
Sep Cocoa: (3026 -4)
Support: 2948-2940, 2920-2915, 2835,
Resistance: 30753100
©2008 Jurgens Bauer & Associates all rights reserved.
Trading floor: (212) 748-3898, cell: (973) 652-4694
DISCLAIMER: Any information and opinions contained herein comes from sources believed to be reliable, but certainly not guaranteed as to accuracy or completeness. No responsibility is assumed with respect to any statement, nor with respect to any expression of opinion herein contained. All views are the opinions of the author at the time of writing and are subject to change without notice. No statement should be construed as an offer to buy or sell a commodity. This publication is for information purposes only: Any and all trading ideas suggested are hypothetical in nature and also subject to change without notice. Commodity futures' trading is speculative by nature and investors can lose more than 100% of their account equity. DISCLAIMER
©2008 Jurgens Bauer & Associates all rights reserved
