Jurgens Bauer's Comments on the Soft Markets for Wednesday 07.09.08
Coffee: Early electronic dealings made futile efforts to probe either side, but since volume was thin, this early trading remained non-committal. However, once options opened it was only a matter of time before additional declines saw the active September move as low as 138.10. When that weakening held prices then moved sideways, hugging 139, and unable to surmount another press downward. As time passed with no assertive action, disappointed shorts decided to cover, and eventually prices responded by probing the upside. This encouraged Dec to move above 140, which prompted additional short covering along with some fund buying. In due course December advanced above 142 and finally made a stab into plus territory. However, since there seems no urgent reason to own coffee and with little in the way of positive news the session ended with Dec settling at 142.40, down 90 points on the day. The market may have run out of bearish steam, and seems searching for direction. Look for attempts on either side to meet with resistance and a range to be established. So far a minor range looks to be between 137.50 and 1Once established, likely between 138 and 143. A move outside of that might get followed.
Cocoa: No follow through on the downside, (at least not yet anyway) resulted in a correction to the correction, with September cocoa advancing on the day about 50 points. Volume was low and the wait and see stance seems to have traders looking for a clear signal. Will this thing hold? Or is another round on the downside in store? I suggest watching to see if merchants step up to take serious advantage of the sizable drop and commit to acquiring coverage, or if specs and funds make a decision to re-enter into longs or puke. Be on guard for another break down, but be advised that this market still has bullish teeth. I suggest considering acquiring straddles.
Sugar: Seems whenever volatility notches downward it pops back up. Sellers have found it a market unwilling to go down, so they covered and in some cases added to longs. The improvement made during the last month has held up well in lieu of outside influences and values seem content to remain between 13 and 14. Expect efforts to probe the upside, which if successful could lead to a move for Oct to 15 cents.
Cotton: Wild day! Big range in the bizarre last hour! Early negative influence expected from grains weighed sufficiently to press values lower. I tried several times to day trade from the long side and got knocked out of the box on each go. Then after holding a low of 7089 in December (I covered at 7091) values found some bargain hunter interest, and being oversold once new highs for the day were made above 7300, prices took off! The resulting pop carried Dec all the way to 75.33!
The recovery in beans had something to do with it of course, but the volume was very light. It seems a temporary vacuum existed which helped to spur the move. There were some bullish option strategies implemented, and of course buy stops added to the fray, but most importantly a lack of selling helped it all come together and fuel the dramatic and swift up move. The up move however proved short lived as selling quickly worked to drop values. First Dec backed off 100 points or so as traders cautiously checked as to the cause of the strength, finding none. Then a more relentless decline pressed Dec right back down, culminating with some all day long known selling on the close.
Admittedly, I'm disappointed. I thought a bounce after the declines of this past week were in order. When it looked like we had one going, it failed, miserably. The settlement brings the low right back into play and suggests another test. The market retains its bearish appearance and sources suggest the West Texas looking good. New business is getting done, but will that be sufficient to combat the selling pressure? I think a bottom is close.
June 25th 2008Support and Resistance Levels
Dec Cotton (CTZ)(71.74 -1.02), last
Support71.30-70.80, 69.80
Resistance73.05-73.10, 74.50
Sep Coffee (KCU)(142.40 -0.90), last
Support138.00-137.50, 133.00
Resistance143.50, 144.30, 146.85
Sept Cocoa (CCU) (2919 +40), last
Support2800-2789, 2620
Resistance2960-2980
Oct Sugar (SBV) (13.75 +0.23), last
Support13.55, 13.33-13.25
Resistance13.80-13.95, 14.10-14.20, 15?
©2008 Jurgens Bauer & Associates all rights reserved.
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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
