Coffee Traders' Forum - A Discussion about Coffee Futures Trading
Coffee Traders Discussion Forum
More COT detail below for week ending 10/3
From a position reversal standpoint, note that the "commercials" went from a small net long positon in COCOA to a small net short position during the latest reporting period. The fund net short COCOA position has also declined steadily for the last six weeks. To me, the COCOA technical picture also looks bearish and at the upper end of the 10 month trading range.
The COFFEE COT and technical picture is bullish. The gap at $1.34 should be filled shortly. Ignoring weather, it is important to note that the NY Arabica market generally trades within a “W” type pattern for the next six weeks.
COT also indicates the range bound and liquidated SUGAR market should be purchased on breaks.
Given the unpredictable N. Korean picture, long only options in lieu of futures or short futures options make sense. Getting wiped out overnight does not make sense. A correction in the long dollar and short Euro, Gold & Bond positions should also be expected. Volume spikes have been very accurate in calling market turns lately. Divergence also remains the gluteus maximus kicking technical tool of choice. It does, however, require some patience at times.
Looking at the grains, seems like CORN and the NON-CHICAGO WHEAT CONTRACTS are ready for a corrective bounce. Given the record short commercial position and short liquidation on the part of the funds, MEAL may also be a sell. The last reporting period also witnessed a "fund" reversal in meal, i.e., shift from net short to net long. Big jump in CORN open interest at the bottom. Funds loaded up while the commercials have reduced their short position. Seems like a surprise coming.
GOLD could be the sleeper trade of all. Very important to pay attention.